Skip to main content
Internet Archive's 25th Anniversary Logo

Full text of "The Road To Serfdom"

See other formats

The Road to Serfdom 

with The Intellectuals and Socialism 

The Road to Serfdom 

with The Intellectuals and Socialism 




The Institute of Economic Affairs 

This combined edition first published in Great Britain in 2005 by 
The Institute of Economic Affairs 
2 Lord North Street 

London SWiP 3LB 
in association with Profile Books Ltd 

This condensed version of The Road to Serfdom was first published in Great Britain in 1999 
in the 'Rediscovered Riches' series by The Institute of Economic Affairs, and reissued as 
Occasional Paper 122 in 2001 

This condensed version of The Road to Serfdom © Reader's Digest, 
reproduced by kind permission 

The Road to Serfdom is published in all territories outside the USA by Routledge. 
This version is published by kind permission. 

'The Intellectuals and Socialism' previously published in Great Britain in 1998 in the 
'Rediscovered Riches' series by the Institute of Economic Affairs 

'The Intellectuals and Socialism' © The University of Chicago Law Review 1949. 
Reproduced by kind permission. 

All other material copyright © The Institute of Economic Affairs 2005 

Every effort has been made to contact the copyright holders associated with this edition. 
The IEA will be pleased to include any corrections in future printings. 

The mission of the Institute of Economic Affairs is to improve public understanding of 
the fundamental institutions of a free society, with particular reference to the role of 
markets in solving economic and social problems. 

The moral right of the authors has been asserted. 

All rights reserved. Without limiting the rights under copyright reserved above, no part 
of this publication may be reproduced, stored or introduced into a retrieval system, 
or transmitted, in any form or by any means (electronic, mechanical, photocopying, 
recording or otherwise), without the prior written permission of both the copyright 
owner and the publisher of this book. 

A CIP catalogue record for this book is available from the British Library. 

ISBN 0 255 36576 4 

Many IEA publications are translated into languages other than English or are reprinted. 
Permission to translate or to reprint should be sought from the Director General at the 
address above. 

Typeset in Stone by MacGuru 
Printed and bound in Great Britain by Hobbs the Printers 


The authors 7 

Foreword by Walter E. Williams 1 0 


Foreword by Edwin J. Feulner Jr 1 9 
Introduction: Hayek, Fisher and The Road to Serfdom 

by John Blundell 22 
Preface to the Reader's Digest condensed version of 

The Road to Serfdom 34 

Summary 35 

The Road to Serfdom (condensed version) 39 

Planning and power 40 

Background to danger 42 

The liberal way of planning 45 

The great Utopia 47 

Why the worst get on top 5 1 

Planning vs. the Rule of Law 57 

Is planning 'inevitable'? 59 

Can planning free us from care? 61 

Two kinds of security 66 

Toward a better world 70 


The Road to Serfdom in cartoons 



Foreword by Edwin J. Feulner Jr 93 
Introduction: Hayek and the second-hand dealers in ideas 

by John Blundell 96 

The Intellectuals and Socialism 105 

About the IEA 



Friedrich A. Hayek 

Friedrich A. Hayek (1899-1992) was born in Vienna and obtained 
two doctorates from the University of Vienna, in law and political 
economy. He worked under Ludwig von Mises at the Austrian 
Institute for Business Cycle Research, and from 1929 to 1931 was 
a lecturer in economics at the University of Vienna. His first 
book, Monetary Theory and the Trade Cycle, was published in 1929. 
In 1931 Hayek was made Tooke Professor of Economic Science 
and Statistics at the London School of Economics, and in 1950 
he was appointed Professor of Social and Moral Sciences at the 
University of Chicago. In 1962 he was appointed Professor of 
Political Economy at the University of Freiburg, where he became 
Professor Emeritus in 1967. Hayek was elected a Fellow of the 
British Academy in 1944, and in 1947 he organised the conference 
in Switzerland which resulted in the creation of the Mont Pelerin 
Society. He was awarded the Nobel Prize in Economics in 1974 and 
was created a Companion of Honour in 1984. In 1991 George Bush 
awarded Hayek the Presidential Medal of Freedom. His books 
include The Pure Theory of Capital, 1941, The Road to Serfdom, 1944, 
The Counter- Revolution of Science, 1952, The Constitution of Liberty, 
i960, Law, Legislation and Liberty, 1973-9, and The Fatal Conceit, 


John Blundell 

John Blundell is Director General of the Institute of Economic 
Affairs. He was previously President of the Institute for Humane 
Studies at George Mason University and the Atlas Economic 
Research Foundation, founded by the late Sir Antony Fisher to 
establish 'sister' organisations to the IEA. He serves on the boards 
of both organisations and is a former Vice President of the Mont 
Pelerin Society. 

Edwin J. Feulner Jr 

Edwin J. Feulner Jr has served as President of the Heritage Founda- 
tion since 1977. He is a past President of the Mont Pelerin Society. 
He previously served in high-level positions in both the legislative 
and executive branches of the United States federal government. 
He received his Ph.D. from the University of Edinburgh and was 
awarded the Presidential Citizen's Medal by Ronald Reagan in 
1989 for 'being a leader of the conservative movement by building 
an organisation dedicated to ideas and their consequences 

Walter E. Williams 

Walter Williams is John M. Olin Distinguished Professor of 
Economics at George Mason University, Fairfax, Virginia. In 
addition, he serves as an Adjunct Professor of Economics at Grove 
City College in Grove City, Pennsylvania. He has also served on 
the faculties of Los Angeles City College, California State Univer- 
sity Los Angeles, and Temple University in Philadelphia. He is the 
author of over eighty publications that have appeared in schol- 
arly journals such as Economic Inquiry, American Economic Review, 



Georgia Law Review, Journal of Labor Economics and Social Science 
Quarterly, as well as popular publications such as Newsweek, The 
Freeman, National Review, Reader's Digest, Cato Journal and Policy 
Review. Dr Williams serves on the boards of directors of Citizens 
for a Sound Economy, the Reason Foundation and the Hoover 
Institution, and on the advisory boards of the IEA, the Landmark 
Legal Foundation, the Alexis de Tocqueville Institute, the Cato 
Institute and others. He has frequently given expert testimony 
before Congressional committees on public policy issues ranging 
from labour policy to taxation and spending. He is a member of 
the Mont Pelerin Society and the American Economic Associa- 



Friedrich A. Hayek was one of the twentieth century's greatest 
philosophers. While he is best known for his work in economics, 
he also made significant contributions in political philosophy and 
law. The publication for which Professor Hayek is most widely 
known is The Road to Serfdom, written during World War II, the 
condensed Reader's Digest version of which is presented here along 
with what might be seen as his follow-up, The Intellectuals and 
Socialism, first published by the University of Chicago Law Review 
in 1949. 

A focal point of The Road to Serfdom was to offer an explana- 
tion for the rise of Nazism, to correct the popular and erroneous 
view that it was caused by a character defect of the German people. 
Hayek differs, saying that the horrors of Nazism would have been 
inconceivable among the German people a mere fifteen years 
before Adolf Hitler's rise to power. Indeed, 'throughout most 
of its history [Germany was] one of the most tolerant European 
countries for Jews'. 1 Other evidence against the character defect 
argument is that the writings of some German philosophers, such 
as Johann Wolfgang von Goethe, Wilhelm von Humboldt and 
Friedrich Schiller, served as inspiration for ideas about the liberal 

1 Thomas Sowell, The Economics and Politics of Race, William Morrow & Company, 
New York, 1983, p. 86. 



order later expressed in the writings of British philosophers such 
as John Stuart Mill and David Hume. 

What happened in Germany? Hayek explains, 'The supreme 
tragedy is still not seen that in Germany it was largely people of 
good will who, by their socialist policies, prepared the way for 
forces which stand for everything they detest'. Hayek's explana- 
tion for the rise of Nazism was not understood and appreciated 
in 1944, and it is still not fully understood and appreciated today. 
Collectivism, whether it is in Germany, the former Soviet Union, 
Britain or the USA, makes personal liberty its victim. 

How do we combat collectivism? Hayek provides some 
answers in The Intellectuals and Socialism. In a word or two, those 
who support the liberal social order must attack the intellectual 
foundations of collectivism. Hayek urges that an understanding 
of just what it is that leads many intellectuals toward socialism 
is vital. It is neither, according to Hayek, selfish interests nor evil 
intentions that motivate intellectuals towards socialism. On the 
contrary, they are motivated by 'mostly honest convictions and 
good intentions'. Hayek adds that it is necessary to recognise 
that 'the typical intellectual is today more likely to be a socialist 
the more he is guided by good will and intelligence'. Joseph A. 
Schumpeter differed, seeing Hayek's assessment as 'politeness to 
a fault'. 2 

Hayek argues that the roots of collectivism have nowhere orig- 
inated among working-class people. Its roots lie among intellec- 
tuals - the people Hayek refers to as 'second-hand dealers in ideas' 
- who had to work long and hard to get working-class people to 

2 J. Schumpeter, review of The Road to Serfdom, Journal of Political Economy, June 
1946: 269-270. 



accept the vision they put forward. The intellectuals or second- 
hand dealers in ideas to whom he refers are journalists, teachers, 
ministers, radio commentators, cartoonists and artists, who 
Hayek says 'are masters of the technique of conveying ideas but 
are usually amateurs so far as the substance of what they convey 
is concerned'. 

In 1949, when Hayek wrote The Intellectuals and Socialism, 
the second-hand dealers in collectivist ideas were a dominant 
force. He appeared to be pessimistic about the future of liberty 
because those who were on the conservative/free market side of 
the political spectrum were weak, isolated and had little voice. In 
1947, Hayek, along with several other distinguished free market 
scholars, addressed some of the isolation by founding the Mont 
Pelerin Society. The purpose of the Society was to hold meetings 
and present papers and exchange ideas among like-minded 
scholars with the hope of strengthening the principles of a free 
society. The Mont Pelerin Society now has over 500 members 
worldwide, and can boast that eight of its members have won 
Nobel Prizes in economics. 

Since Hayek wrote The Intellectuals and Socialism there has 
been nothing less than monumental change in the marketplace 
of ideas. In 1949, there was only one free market organisation 
- The Foundation for Economic Education, founded by Leonard 
Read. Today there are over 350 free market organisations in 50 
countries, including former communist countries. The major 
media no longer has the monopoly on news and the dissemina- 
tion of ideas that it once had. Network television faces competi- 
tion from satellite and cable television. Talk radio has exploded. 
The Rush limbaugh Show, on which I have served as occasional 
substitute host for over thirteen years, is carried on 625 different 



radio stations, on satellite and over the internet, reaching tens of 
millions of people worldwide each week. Much to socialist dismay, 
the most popular and successful talk radio shows are those hosted 
by conservative/free market hosts. Then there are the bloggers 
- the electronic equivalent of conservative/free market journal- 
ists - who are constantly at the ready to challenge and reveal news 

While there have been monumental changes in the ideas 
marketplace, the last bastion of solidly entrenched socialism lies 
on college and university campuses around the world. Hayek 
argues that 'It is perhaps the most characteristic feature of the 
intellectual that he judges new ideas not by their specific merits 
but by the readiness with which they fit into his general concep- 
tions, into the picture of the world which he regards as modern or 

Professor Thomas Sowell puts the argument in another way 
that encompasses Hayek's. 3 Sowell says that there are essentially 
two visions of how the world operates - the constrained vision 
and the unconstrained. The constrained vision sees mankind with 
its moral limitations, acquisitiveness and ego as inherent and 
immutable. Under this vision, the fundamental challenge that 
confronts mankind is to organise a system consisting of social 
mores, customs and laws that make the best of the human condi- 
tion rather than waste resources trying to change human nature. 
It is this constrained vision of mankind that underlies the thinking 
and writings of Adam Smith, Edmund Burke and Alexander 
Hamilton, among others. 

3 Thomas Sowell, A Conflict of Visions: Ideological Origins of Political Struggles, Wil- 
liam Morrow & Company, New York, 1987. 



By contrast, the unconstrained vision sees mankind as capable 
of perfection and capable of putting the interests of others first. 
Sowell says that no other eighteenth-century writer's vision stands 
in starker contrast to that of Adam Smith than William Godwin's 
in Enquiry Concerning Political Justice. Godwin viewed intention to 
benefit others as the essence of virtue that leads to human happi- 
ness. Benefits to others that arise unintentionally are virtually 
worthless. Sowell says, 'Unlike Smith, who regarded human self- 
ishness as a given, Godwin regarded it as being promoted by the 
very system of rewards used to cope with it'. 4 

In the last paragraph of The Intellectuals and Socialism, Hayek 
says, 'Unless we [true liberals] can make the philosophic founda- 
tion of a free society once more a living intellectual issue, .... the 
prospects of freedom are indeed dark'. If Hayek is correct that 
neither selfish interests nor evil intentions motivate intellectuals 
towards socialism, there are indeed grounds for optimism. Educa- 
tion offers hope. We can educate them, or at least make others 
immune, to the errors of their thinking. 

I think the strategy has at least two principal components. 
First, there is not a lot to be gained by challenging the internal logic 
of many socialist arguments. Instead, it is the initial premises that 
underlie their arguments that must be challenged. Take one small 
example. One group of people articulates a concern for the low- 
skilled worker and argues for an increase in the minimum wage 
as a means to help them. Another group of people articulating the 
identical concern might just as strongly oppose an increase in the 
minimum wage, arguing that it will hurt low-skilled workers. 

How can people who articulate identical ends, as is so often 

4 Ibid., p. 24. 



the case, strongly defend polar opposite policies? I believe part of 
the answer is that they make different initial premises of how the 
world works. If one's initial premise is that an employer needs so 
many workers to perform a particular job, then enacting a higher 
minimum wage means that all the workers will keep their jobs. 
The only difference is that they will receive higher wages and the 
employer will make less profit. Thus, enacting a higher minimum 
wage clearly benefits low-skilled workers. By contrast, if one's 
initial premise is that there are alternative means to produce a 
product, and employers will seek the least-cost method of doing 
so, then raising the minimum wage will cause employers to seek 
substitutes such as automation or relocation overseas, thereby 
reducing the amount of workers they hire. With the latter vision, 
one can have the interests of low-skilled workers at heart and 
oppose an increase in the minimum wage, because it reduces 
opportunities for low-skilled workers. If Hayek is correct in his 
assessment of socialists, it would appear that it is a simple task to 
empirically show that there are alternative methods of production 
and that employers are not insensitive to increases in the cost of 

The second part of the strategy is to make better, unassailable 
arguments for personal liberty. Any part of the socialist agenda 
can be shown as immoral under the assumption that people own 
themselves. The idea of self ownership makes certain forms of 
behaviour unambiguously immoral. Murder, rape and theft are 
immoral simply because they violate a person's property rights to 
himself. Government programmes such as subsidies to farmers, 
bailouts for businesses, and welfare or medical care for the 
indigent are also immoral for the same reason. Government has 
no resources of its very own. The only way government can give 



one person money is to first take it from another person. Doing 
so represents the forcible using of one person, through the tax 
code, to serve the purposes of another. That is a form of immor- 
ality akin to slavery. After all, a working definition of slavery is 
precisely that: the forcible use of one person to serve the purposes 
of another. 

Well-intentioned socialists, if they are honest people as Hayek 
contends, should be able to appreciate that reaching into one's 
own pockets to assist one's fellow man is laudable and praise- 
worthy. Reaching into another's pocket to do so is theft and by 
any standard of morality should be condemned. 

Collectivists can neither ignore nor dismiss irrefutable 
evidence that free markets produce unprecedented wealth. 
Instead, they indict the free market system on moral grounds, 
charging that it is a system that rewards greed and selfishness and 
creates an unequal distribution of income. Free markets must be 
defended on moral grounds. We must convince our fellow man 
there cannot be personal liberty in the absence of free markets, 
respect for private property rights and rule of law. Even if free 
markets were not superior wealth producers, the morality of the 
market would make them the superior alternative. 


John M. Olin Distinguished Professor of Economics 
George Mason University, Fairfax, Virginia 
May 2005 

The views expressed in Occasional Paper 136 are, as in all IEA 
publications, those of the author and not those of the Institute 
(which has no corporate view), its managing trustees, Academic 
Advisory Council members or senior staff. 


The Road to Serfdom 


John Chamberlain characterised the period immediately 
following World War II in his foreword to the first edition of The 
Road to Serfdom as 'a time of hesitation'. Britain and the European 
continent were faced with the daunting task of reconstruction 
and reconstitution. The United States, spared from the physical 
destruction that marked Western Europe, was nevertheless recov- 
ering from the economic whiplash of a war-driven economic 
recovery from the Great Depression. Everywhere there was a 
desire for security and a return to stability. 

The intellectual environment was no more steady. The rise 
and subsequent defeat of fascism had provided an extremely wide 
flank for intellectuals who were free to battle for any idea short 
of ethnic cleansing and dictatorial political control. At the same 
time, the mistaken but widely accepted notion that the unpre- 
dictability of the free market had caused the depression, coupled 
with four years of war-driven, centrally directed production, and 
the fact that Russia had been a wartime ally of the United States 
and England, increased the mainstream acceptance of peace-time 
government planning of the economy. 

At this hesitating, unstable moment appeared the slim volume 
of which you now hold the condensed version in your hands, 
F. A. Hayek's The Road to Serfdom. Occupying his spare time 
between September 1940 and March 1944, the writing of The Road 



to Serfdom was in his own words more 'a duty which I must not 
evade' 1 than any calculated contribution to his curriculum vitae. 
As Hayek saw it, he was merely pointing out 'apprehensions which 
current tendencies [in economic and political thought] must create 
in the minds of many who cannot publicly express them . . . ' 2 But 
as is often the case, this duty-inspired task had tremendous conse- 
quences unintended by the author. 

Hayek employed economics to investigate the mind of man, 
using the knowledge he had gained to unveil the totalitarian 
nature of socialism and to explain how it inevitably leads to 
'serfdom'. His greatest contribution lay in the discovery of a 
simple yet profound truth: man does not and cannot know every- 
thing, and when he acts as if he does, disaster follows. He recog- 
nised that socialism, the collectivist state, and planned economies 
represent the ultimate form of hubris, for those who plan them 
attempt - with insufficient knowledge - to redesign the nature of 
man. In so doing, would-be planners arrogantly ignore traditions 
that embody the wisdom of generations; impetuously disregard 
customs whose purpose they do not understand; and blithely 
confuse the law written on the hearts of men - which they cannot 
change - with administrative rules that they can alter at whim. 
For Hayek, such presumption was not only a 'fatal conceit', but 
also 'the road to serfdom'. 

The impact of the simple ideas encapsulated in The Road to 
Serfdom was immediate. The book went through six impressions 
in the first 16 months, was translated into numerous foreign 
languages, and circulated both openly in the free world and clan- 

1 F. A. Hayek, The Road to Serfdom, Routledge, London, 1944, p. v. 

2 Ibid., p. vii. 



destinely behind the emerging iron curtain. It is no exaggeration 
to say that The Road to Serfdom simultaneously prevented the 
emergence of full-blown socialism in Western Europe and the 
United States and planted seeds of freedom in the Soviet Union 
that would finally bear fruit nearly 45 years later. Socialist catch- 
phrases such as 'collectivism' were stricken from the mainstream 
political debate and even academic socialists were forced to retreat 
from their defence of overt social planning. 

But the true value of The Road to Serfdom is to be found not in 
the immediate blow it dealt to socialist activists and thinkers - as 
important as that was - but in the lasting impression it has made 
on political and economic thinkers of the past 55 years. By Hayek's 
own admission, 'this book . . . has unexpectedly become for me 
the starting point of more than 30 years' work in a new field'. 1 


November 1999 

3 Although these words were written in 1976 it is safe to say that the influence of 
The Road to Serfdom guided Hayek's work until his death in 1992. 




My story begins with a young Englishman named Lionel 
Robbins, later Lord Robbins of Clare Market. In 1929, at the age 
of only 30, he had been appointed Professor of Economics at the 
London School of Economics and Political Science (LSE), a college 
of the University of London. He was arguably the greatest English 
economist of his generation, and he was fluent in German. This 
skill alerted him to the work of a young Austrian economist, 
Friedrich Hayek, and he invited his equally young counterpart 
to lecture at the LSE. Such was the success of these lectures that 
Hayek was appointed Tooke Professor of Economic Science and 
Statistics at the LSE in 1931, and became an English citizen long 
before such status had become a 'passport of convenience'. 

In the 1930s John Maynard Keynes was in full flow. He was 
the most famous economist in the world, and Hayek was his only 
real rival. In 1936 Keynes published his infamous General Theory of 
Employment, Interest and Money. 2 Hayek was tempted to demolish 
this nonsense but he held back, for a very simple and very human 
reason. Two years earlier, a now forgotten Keynesian tract (A 

1 This introduction is based on a speech given by the author on 26 April 1999 
to the 33rd International Workshop 'Books for a Free Society' of the Atlas 
Economic Research Foundation (Fairfax, VA) in Philadelphia, PA. 

2 J. M. Keynes, The General Theory of Employment, Interest and Money, Macmillan, 
London, 1936. 



Treatise on Money) 1 had been ripped apart by Hayek in a two-part 
journal review. Keynes had shrugged off the attack with a smile, 
saying as they passed one day in Clare Market: 'Oh, never mind; 
I no longer believe all that.' Hayek was not about to repeat the 
demolition job on The General Theory in case Keynes decided, at 
some future point, that he no longer believed in 'all that' either - a 
decision I heard Hayek regret often in the 1970s. 

War came and the LSE was evacuated from central London 
to Peterhouse College, Cambridge. Typically, Keynes arranged 
rooms for his intellectual arch-rival Hayek at King's College where 
Keynes was Bursar and - also typically - Hayek volunteered for 
fire duty. That is, he offered to spend his nights sitting on the roof 
of his college watching out for marauding German bombers. 

It was while he sat out there at night that he began to wonder 
about what would happen to his adopted country if and when 
peace came. It was clear to Hayek that victory held the seeds of its 
own destruction. The war was called 'the People's War' because 
- unlike most previous wars - the whole population had fought 
in one way or another. Even pacifists contributed by working the 
land to feed the troops. Hayek detected a growing sense of 'As in 
war, so in peace' - namely that the government would own, plan 
and control everything. The economic difficulties created by the 
war would be immense: people would turn to government for a 
way out. And so, as Hayek penned his great classic, The Road to 
Serfdom, he was moved not only by a love for his adopted country 
but also by a great fear that national planning, that socialism, that 
the growth of state power and control would, inevitably, lead the 
UK and the US to fascism, or rather National Socialism. 

3 J. M. Keynes, A Treatise on Money, Macmillan, London, 1930. 



Antony Fisher, the man who did 

So let me talk now about The Road to Serfdom and one man in 
particular who was moved by its lessons to do something. That 
man is the late Antony George Anson Fisher, or AGAF as we 
referred to him, and still do. 

Fisher came from a family of mine owners, members of parlia- 
ment, migrants and military men. He was born in 1915 and soon 
followed by his brother and best friend Basil. His father was killed 
by a Turkish sniper in 1917. Brought up in South East England by 
his young widowed mother, an independent New Zealander from 
Piraki, Akaroa, AGAF attended Eton and Cambridge, where he 
and his brother both learnt to fly in the University Air Squadron. 
On graduating, Antony's several initiatives included: 

• a car rental firm - a success 

• a plane rental firm - also a success; and 

• the design and manufacture of a cheap sports car called the 
Deroy - a failure because of a lack of power. 

At the start of the war Antony and Basil volunteered for the 
RAF and were soon flying Hurricanes in III Squadron in the Battle 
of Britain. One day Basil's plane was hit by German fire. He bailed 
out over Selsey Bill but his parachute was on fire and both plane 
and man plummeted to the ground, separately. 

A totally devastated Antony was grounded for his own safety, 
but used his time productively to develop a machine (the Fisher 
Trainer) to teach trainee pilots to shoot better. He was also an avid 
reader of Reader's Digest. Every copy was devoured, read aloud to 
his family, heavily underlined and kept in order in his study. His 
first child, Mark, recalls a wall of Antony's study lined with row 



upon row of years - decades even - of copies of Reader's Digest. 

So how did our fighter pilot Fisher come across our academic 
Hayek? What follows is the story I have pieced together. Not all 
parts of it are accepted by all interested parties, but the pieces do 
fit. So this is my story and I'm sticking to it. 

The marriage of true minds 

The Road to Serfdom was published in March 1944 and, despite 
wartime paper shortages, it went through five reprints in the UK 
in 15 months. In spite of this, owing to wartime paper rationing, 
the publishers, Routledge, were unable to keep up with demand 
and Hayek complained that The Road to Serfdom had acquired 
a reputation for being 'that unobtainable book'. 4 It was such an 
incredible hit that Hayek lost track of the reviews and critics were 
moved to write whole books attacking him in both the UK and 
the US. Dr Laurence Hayek, only son of F. A. Hayek, owns his late 
father's own first edition copy of The Road to Serfdom as well as the 
printers' proof copy with Hayek's corrections. On the inside back 
cover of the former Hayek began listing the reviews as they came 
out. The list reads as follows: 

Tablet 11/3/44 (Douglas Woodruff) 

Sunday Times 12/3 (Harold Hobson one 

or two sentences) 
9/4 (G. M. Young) 

Birmingham Post 14/3 (TWH) 

4 Quoted in R. Cockett, Thinking the Unthinkable: Think Tanks and the Economic 
Counter- Revolution, 1931-1983, Fontana, London, 1995, p. 85. 



Yorkshire Post 

1 IflU/lLlUL iyCWo 

5 U / 5 


.5 U / 5 

UUlly <Jt\tLLiL 


Times Literary Supplement 




(M. Polanyi) 

Irish Times 




(George Orwell) 

Manchester Guardian 



But, as Hayek said to me in 1975, they started coming so fast he 
lost track and stopped recording them. 

In early 1945 the University of Chicago Press published the 
US edition of The Road to Serfdom and, like Routledge in the UK, 
found themselves unable to meet the demand for copies owing to 
paper rationing. However, in April 1945 the book finally reached a 
mass audience when the Reader's Digest published their condensed 
version. 5 (Hayek thought it impossible to condense but always 
commented on what a great job the Reader's Digest editors did.) 
Whereas the book publishers had been dealing in issues of four or 
five thousand copies, the Reader's Digest had a print run which was 
measured in hundreds of thousands. For the first and still the only 
time, they put the condensed book at the front of the magazine 
where nobody could miss it - particularly a Digest junkie like 

The Reader's Digest appeared while Hayek was on board a ship 
en route to the USA for a lecture tour which had been arranged to 

5 John Blundell discusses the contents of that issue of the Reader's Digest in detail 
in 'Looking back at the condensed version of The Road to Serfdom after 60 years', 
Economic Affairs, Vol. 24, No. 1. 



coincide with the US book publication. He arrived to find himself 
a celebrity: 

... I was told all our plans were changed: I would be going 
on a nationwide lecture tour beginning at NY Town Hall . . . 
Imagine my surprise when they drove me there the next 
day and there were 3,000 people in the hall, plus a few 
score more in adjoining rooms with loudspeakers. There I 
was, with this battery of microphones and a veritable sea of 
expectant faces . 6 

Now I get to the detective work. That late spring/early summer 
of 1945 saw both Hayek and Fisher on the move. Hayek had spent 
the whole of the war at Cambridge but now it was safe for the 
LSE to return to London. Fisher had spent the war stationed all 
over the UK training pilots in gunnery and rising to the rank of 
Squadron Leader. He too was on the move to the War Office (now 
the Ministry of Defence) in central London, just a ten-minute walk 
from the LSE. Laurence Hayek and the LSE both confirm the dates 
of Hayek's move, while Fisher's RAF record, recently obtained 
from the Ministry of Defence by his elder son Mark, clearly dates 

Forty years later both Hayek and Fisher were not overly 
helpful about exactly what happened next. Hayek in particular 
used to claim he had absolutely no recollection whatsoever of 
Fisher ever coming to him for advice. Fisher on the other hand was 
always very clear and very consistent about the dialogue - almost 
verbatim - but not so helpful on exactly how it happened. Here is 
how I believe it came about. 

6 Interview with Hayek in The Times, 5 May 1985, quoted in Cockett, op. cit, 
pp. 100-101. 



Fisher, the Digest junkie, is already politically active and is also 
worried about the future for his country. The April 1945 edition 
lands on his desk as he is moving to London and, after reading the 
cover story, he notes on the front that the author is at the Univer- 
sity of London. A phone call establishes that the LSE is back in 
place and, one lunchtime or late one afternoon, Fisher makes the 
short walk from his office to the LSE and knocks on Hayek's door. 
Fisher also recalled the physical setting of Hayek's office in minute 
and accurate detail, including its proximity to that of the dreaded 
Harold Laski. Fisher claimed that after small talk (which neither 
excelled at) the conversation went like this: 

Fisher I share all your worries and concerns as expressed in The 
Road to Serfdom and I'm going to go into politics and put it 
all right. 

Hayek No you're not! Society's course will be changed only by a 
change in ideas. First you must reach the intellectuals, the 
teachers and writers, with reasoned argument. It will be 
their influence on society which will prevail, and the politi- 
cians will follow. 

I have this quote framed above my desk alongside Keynes's 
famous line: 'The ideas of economists and political philosophers, 
both when they are right and when they are wrong, are more 
powerful than is commonly understood. Indeed the world is ruled 
by little else. Practical men, who believe themselves to be quite 
exempt from any intellectual influences, are usually the slaves of 
some defunct economist.' 7 

7 Keynes, The General Theory of Employment, Interest and Money , op. cit., p. 383. 



Finally on this issue, let me quote Fisher's own words of 3 
July 1985 when he spoke at a party at the IEA to celebrate its 30th 
birthday. (This would have been the 30th anniversary of the IEA's 
first book in June 1955 rather than incorporation in November 1955 
or the actual opening in 1957.) At that party in July 1985 Fisher said: 

It was quite a day for me when Friedrich Hayek gave me 
some advice which must be 40 years ago almost to the day and 
which completely changed my life. Friedrich got me started 
. . . and two of the things he said way back are the things 
which have kept the IEA on course. One is to keep out of 
politics and the other is to make an intellectual case ... if 
you can stick to these rules you keep out of a lot of trouble 
and apparently do a lot of good. 

As I said, 30 years later, on countless occasions, Hayek did not 
dispute the event or disown the advice, he simply said he could not 
remember. But it is of course very Hayekian advice and very much 
in keeping with his classic essay 'The Intellectuals and Socialism', 
which came out just a few years later and which has just been 
republished by the IEA. 8 This was hardly a blueprint for action 
- 'reach the intellectuals' - and indeed the next decade saw little 
direct fallout from that conversation, although three American 
intellectual entrepreneurs who had also sought out Hayek did get 
the ball rolling in the US. 

The road to the IEA 

Hayek taught at the LSE, got divorced in Arkansas, remarried, 
moved to Chicago and wrote The Constitution of Liberty. 

8 F. A. Hayek, The Intellectuals and Socialism, Rediscovered Riches No. 4, IEA, Lon- 
don, 1998. 



Fisher tried stockbroking, became a farmer, wrote a very 
prescient monograph, 'The Case for Freedom', 9 imported the 
idea of factory-farming of chickens, championed liberty in many 
different campaigns, visited the US looking for institute models he 
could copy, published The Free Convertibility of Sterling by George 
Winder, 10 incorporated the Institute of Economic Affairs, hired 
Ralph Harris and, as he always did, having hired the talent let 
it rip with a very hands-off approach to management. (When in 
1987 he entrusted to me the future of the Atlas Economic Research 
Foundation, the body dedicated to building new IEAs around the 
world, he made it very clear that he was there if I wanted his help 
but that he really did expect me to crack on on my own.) 

To begin with, in the late 1950s, it was not at all clear what the 
IEA would do. The exchange control book by Winder had been 
short, easily understood and on a fairly narrow but important 
topic. It had sold out its 2,000 print run very quickly because of 
Henry Hazlitt's review in Newsweek. Unfortunately the printer who 
had also sold the book for Antony went bankrupt, and the 2,000 
names and addresses of the purchasers were lost. But Fisher had 
visited the Foundation for Economic Education in Irvington-on- 
Hudson, New York, hadbeen exposed to its magazine, The Freeman, 
and still adored Reader's Digest. Harris had been a party political 
man turned academic turned editorial writer, while Arthur 
Seldon, the first editorial director, had been a research assistant 
to the famous LSE economist Arnold Plant before becoming chief 
economist of a brewers' association. Out of this mish-mash of 
experiences - academic, business, political, journalistic - came the 

9 A. Fisher, The Case for Freedom, Runnymede Press, London, undated. 

10 G. Winder, The Free Convertibility of Sterling, The Batchworth Press for the Insti- 
tute of Economic Affairs, London, 1955. 



distinctive IEA approach of short monographs containing the very 
best economics in good, jargon-free English, written by academics 
(mostly) or quasi-academics, in language accessible to the layman 
but still of use to the expert. 

In the early days it was hard to find authors, hard to raise 
money and hard to get reviews and sales. At times everybody had 
to down pens to raise money or quickly pick up pens to co-author 
a paper. The first clear success of this venture - inspired by The 
Road to Serfdom, advised by Hayek, implemented by Fisher and 
run by Harris and Seldon - was the repeal of Resale Price Main- 
tenance in 1964, a fantastic reform. It effectively outlawed the 
prevailing practice by which manufacturers priced goods - they 
literally stamped the price on the article - and discounting was 
illegal. There was no such thing as shopping around. This change 
alienated the small-business vote and put the Tories out for six 
years, but it transformed the UK economy and allowed a nation 
of shopkeepers to spread their wings. It was clearly heralded by 
a i960 IEA study, Resale Price Maintenance and Shoppers ' Choice 
by Basil Yamey. 11 Other successes followed and the IEA's impetus 
grew, but what was happening to Hayek and Fisher? 

Hayek had moved from Chicago back to Europe, and in 
December 1974 received the Nobel Prize. He was 75 and his health 
had not been good. He was also depressed. However the prize 
(and the big cheque) cheered him up no end. 

Fisher had sold the chicken business for millions and had put a 
large part of his minority share into an experimental turtle farm in 
the Cayman Islands. Well, the experiment worked brilliantly but 

11 B. S. Yamey, Resale Price Maintenance and Shoppers ' Choice, Hobart Paper No. 1, 
IEA, London, i960. 



the environmentalists closed down his largest market - the US. 12 
He refused to hide behind limited liability and used the balance of 
his fortune to pay off all debts. 

1974 - now 30 years after The Road to Serfdom - was a big year 
for Fisher too, because, free from business concerns, he was able to 
respond to businessmen and others around the world who noted 
the IEA's growing influence and came to him for advice. 

Sowing the seed 

So the entrepreneur turned fighter pilot turned gunnery trainer 
turned stockbroker turned dairy farmer turned chicken pioneer 
turned turtle saviour became the Johnny Appleseed of the free- 
market movement, going all over the world and setting up new 
IEA-type operations. 

First he joined the very young Fraser Institute in Vancouver, 
BC; quickly moved on to help Greg Lindsay and the Centre for 
Independent Studies in Australia; hired David Theroux, recently 
departed from the Cato Institute, to set up the Pacific Research 
Institute in San Francisco; gave support to the Butler brothers 
and Madsen Pirie as they founded the Adam Smith Institute in 
London; and incorporated with William Casey the Manhattan 
Institute where, as they did so, they sat on movers' boxes in an 
otherwise empty office. 

It took ten years to give birth to Institute No. 1 - the IEA. For 
all but twenty years it was the only one in the family; in just six 
years five more were born, and then the fun really started. In 1981 

12 For a full account see P. and S. Fosdick, Last Chance Lost: Can and Should Farming 
Save the Green Sea Turtle?, Irvin S. Naylor, York, PA, 1994. 



Fisher incorporated the Atlas Economic Research Foundation to 
be a focal point for institutes and to channel funds to start-ups. By 
the time of his death in 1988 we listed 30-plus institutes in 20 or so 
countries. By 1991 we were listing 80 and I now count about 100 in 
76 countries. 

All of this can be traced back to this young economist, his 
book, the Reader's Digest condensation, and a young RAF officer 
. . . through the IEA . . . through CIS/PRI/ASI/Manhattan and 
Fraser ... to 100 institutes in 76 countries today, who together are 
literally changing the world. 

To illustrate our impact, let me finish with a story from Lord 
Howell of Guildford, a minister in the 1980s. He came into my 
office recently and pointed at the big boardroom table where 
I work every day and which was donated by Antony in the late 
1960s. Howell said: 'You know, John, it was at that table that we 
first got serious about privatisation in 1968. The idea fizzled in the 
1970s, took off in the 1980s and in the 1990s burns brightly around 
the world.' I replied: 'Yes, it burns so brightly that last year world- 
wide privatisation revenues topped $100 billion for the first time.' 

So it is quite a story we have to tell and it all begins here with 
the condensed version of The Road to Serfdom and the cartoon 
version drawn to my attention only recently by Laurence Hayek. 
Read the condensed version, now published in our 'Rediscovered 
Riches' series for the first time since its original appearance in the 
Reader's Digest, and wonder on all the changes it led to: all the 
misery avoided and all the prosperity created. 


November 1999 



'In The Road to Serfdom', writes Henry Hazlitt in the New York 
Times, 'Friedrich A. Hayek has written one of the most important 
books of our generation. It restates for our time the issue between 
liberty and authority. It is an arresting call to all well-intentioned 
planners and socialists, to all those who are sincere democrats and 
liberals at heart, to stop, look and listen.' 

The author is an internationally known economist. An Austrian 
by birth, he was director of the Austrian Institute for Economic 
Research and lecturer in economics at the University of Vienna 
during the years of the rise of fascism in Central Europe. He has 
lived in England since 1931 when he became Professor of Economic 
Science at the University of London, and is now a British citizen. 

Professor Hayek, with great power and rigour of reasoning, 
sounds a grim warning to Americans and Britons who look to the 
government to provide the way out of all our economic difficulties. 
He demonstrates that fascism and what the Germans correctly 
call National Socialism are the inevitable results of the increasing 
growth of state control and state power, of national 'planning' and 
of socialism. 

In a foreword to The Road to Serfdom John Chamberlain, book 
editor of Harper's, writes: 'This book is a warning cry in a time of 
hesitation. It says to us: Stop, look and listen. Its logic is incontest- 
able, and it should have the widest possible audience.' 



(Jacket notes written by Hayek for the first edition) 

• Is there a greater tragedy imaginable than that in our 
endeavour consciously to shape our future in accordance with 
high ideals we should in fact unwittingly produce the very 
opposite of what we have been striving for? 

• The contention that only the peculiar wickedness of the 
Germans has produced the Nazi system is likely to become 
the excuse for forcing on us the very institutions which have 
produced that wickedness. 

• Totalitarianism is the new word we have adopted to describe 
the unexpected but nevertheless inseparable manifestations 
of what in theory we call socialism. 

• In a planned system we cannot confine collective action to the 
tasks on which we agree, but are forced to produce agreement 
on everything in order that any action can be taken at all. 

• The more the state 'plans' the more difficult planning 
becomes for the individual. 

• The economic freedom which is the prerequisite of any other 
freedom cannot be the freedom from economic care which 
the socialists promise us and which can be obtained only by 
relieving the individual at the same time of the necessity and 
of the power of choice: it must be the freedom of economic 
activity which, with the right of choice, inevitably also carries 
the risk and the responsibility of that right. 



• What our generation has forgotten is that the system of 
private property is the most important guarantee of freedom, 
not only for those who own property, but scarcely less for 
those who do not. 

• We shall never prevent the abuse of power if we are not 
prepared to limit power in a way which occasionally may 
prevent its use for desirable purposes. 

• We shall all be the gainers if we can create a world fit for small 
states to live in. 

• The first need is to free ourselves of that worst form of 
contemporary obscurantism which tries to persuade us that 
what we have done in the recent past was all either wise or 
unavoidable. We shall not grow wiser before we learn that 
much that we have done was very foolish. 


The Reader's Digest condensed version of 
The Road to Serfdom 


(condensed version, published in the Reader's Digest, 
April 1 945 edition) 

The author has spent about half his adult life in his native 
Austria, in close touch with German thought, and the other half in 
the United States and England. In the latter period he has become 
increasingly convinced that some of the forces which destroyed 
freedom in Germany are also at work here. 

The very magnitude of the outrages committed by the National 
Socialists has strengthened the assurance that a totalitarian 
system cannot happen here. But let us remember that 15 years ago 
the possibility of such a thing happening in Germany would have 
appeared just as fantastic not only to nine-tenths of the Germans 
themselves, but also to the most hostile foreign observer. 

There are many features which were then regarded as 'typically 
German' which are now equally familiar in America and England, 
and many symptoms that point to a further development in the 
same direction: the increasing veneration for the state, the fatal- 
istic acceptance of 'inevitable trends', the enthusiasm for 'organi- 
zation' of everything (we now call it 'planning'). 

The character of the danger is, if possible, even less understood 
here than it was in Germany. The supreme tragedy is still not seen 
that in Germany it was largely people of good will who, by their 
socialist policies, prepared the way for the forces which stand 
for everything they detest. Few recognize that the rise of fascism 
and Marxism was not a reaction against the socialist trends of the 



preceding period but a necessary outcome of those tendencies. Yet it 
is significant that many of the leaders of these movements, from 
Mussolini down (and including Laval and Quisling) began as 
socialists and ended as fascists or Nazis. 

In the democracies at present, many who sincerely hate all of 
Nazism's manifestations are working for ideals whose realization 
would lead straight to the abhorred tyranny. Most of the people 
whose views influence developments are in some measure social- 
ists. They believe that our economic life should be 'consciously 
directed', that we should substitute 'economic planning' for the 
competitive system. Yet is there a greater tragedy imaginable than 
that, in our endeavour consciously to shape our future in accord- 
ance with high ideals, we should in fact unwittingly produce the 
very opposite of what we have been striving for? 

Planning and power 

In order to achieve their ends the planners must create power 
- power over men wielded by other men - of a magnitude never 
before known. Their success will depend on the extent to which 
they achieve such power. Democracy is an obstacle to this suppres- 
sion of freedom which the centralized direction of economic 
activity requires. Hence arises the clash between planning and 

Many socialists have the tragic illusion that by depriving 
private individuals of the power they possess in an individualist 
system, and transferring this power to society, they thereby extin- 
guish power. What they overlook is that by concentrating power 
so that it can be used in the service of a single plan, it is not merely 
transformed, but infinitely heightened. By uniting in the hands 



of some single body power formerly exercised independently by 
many, an amount of power is created infinitely greater than any 
that existed before, so much more far-reaching as almost to be 
different in kind. 

It is entirely fallacious to argue that the great power exercised 
by a central planning board would be 'no greater than the power 
collectively exercised by private boards of directors'. There is, in 
a competitive society, nobody who can exercise even a fraction 
of the power which a socialist planning board would possess. To 
decentralize power is to reduce the absolute amount of power, and 
the competitive system is the only system designed to minimize 
the power exercised by man over man. Who can seriously doubt 
that the power which a millionaire, who may be my employer, has 
over me is very much less than that which the smallest bureaucrat 
possesses who wields the coercive power of the state and on whose 
discretion it depends how I am allowed to live and work? 

In every real sense a badly paid unskilled workman in this 
country has more freedom to shape his life than many an employer 
in Germany or a much better paid engineer or manager in Russia. 
If he wants to change his job or the place where he lives, if he 
wants to profess certain views or spend his leisure in a particular 
way, he faces no absolute impediments. There are no dangers to 
bodily security and freedom that confine him by brute force to the 
task and environment to which a superior has assigned him. 

Our generation has forgotten that the system of private 
property is the most important guarantee of freedom. It is only 
because the control of the means of production is divided among 
many people acting independently that we as individuals can 
decide what to do with ourselves. When all the means of produc- 
tion are vested in a single hand, whether it be nominally that of 



'society' as a whole or that of a dictator, whoever exercises this 
control has complete power over us. In the hands of private indi- 
viduals, what is called economic power can be an instrument of 
coercion, but it is never control over the whole life of a person. But 
when economic power is centralized as an instrument of political 
power it creates a degree of dependence scarcely distinguishable 
from slavery. It has been well said that, in a country where the sole 
employer is the state, opposition means death by slow starvation. 

Background to danger 

Individualism, in contrast to socialism and all other forms of 
totalitarianism, is based on the respect of Christianity for the 
individual man and the belief that it is desirable that men should 
be free to develop their own individual gifts and bents. This philo- 
sophy, first fully developed during the Renaissance, grew and 
spread into what we know as Western civilization. The general 
direction of social development was one of freeing the individual 
from the ties which bound him in feudal society. 

Perhaps the greatest result of this unchaining of individual 
energies was the marvellous growth of science. Only since indus- 
trial freedom opened the path to the free use of new knowledge, 
only since everything could be tried - if somebody could be found 
to back it at his own risk - has science made the great strides which 
in the last 150 years have changed the face of the world. The result 
of this growth surpassed all expectations. Wherever the barriers to 
the free exercise of human ingenuity were removed, man became 
rapidly able to satisfy ever-widening ranges of desire. By the begin- 
ning of the twentieth century the working man in the Western world 
had reached a degree of material comfort, security and personal 



independence which 100 years before had hardly seemed possible. 

The effect of this success was to create among men a new sense 
of power over their own fate, the belief in the unbounded poss- 
ibilities of improving their own lot. What had been achieved came 
to be regarded as a secure and imperishable possession, acquired 
once and for all; and the rate of progress began to seem too slow. 
Moreover the principles which had made this progress possible 
came to be regarded as obstacles to speedier progress, impatiently 
to be brushed away. It might be said that the very success of liber- 
alism became the cause of its decline. 

No sensible person should have doubted that the economic 
principles of the nineteenth century were only a beginning - that 
there were immense possibilities of advancement on the lines on 
which we had moved. But according to the views now dominant, 
the question is no longer how we can make the best use of the 
spontaneous forces found in a free society. We have in effect 
undertaken to dispense with these forces and to replace them by 
collective and 'conscious' direction. 

It is significant that this abandonment of liberalism, whether 
expressed as socialism in its more radical form or merely as 
'organization' or 'planning', was perfected in Germany. During 
the last quarter of the nineteenth century and the first quarter of 
the twentieth, Germany moved far ahead in both the theory and 
the practice of socialism, so that even today Russian discussion 
largely carries on where the Germans left off. The Germans, long 
before the Nazis, were attacking liberalism and democracy, capit- 
alism, and individualism. 

Long before the Nazis, too, the German and Italian social- 
ists were using techniques of which the Nazis and fascists later 
made effective use. The idea of a political party which embraces 



all activities of the individual from the cradle to the grave, which 
claims to guide his views on everything, was first put into practice 
by the socialists. It was not the fascists but the socialists who began 
to collect children at the tenderest age into political organizations 
to direct their thinking. It was not the fascists but the socialists 
who first thought of organizing sports and games, football and 
hiking, in party clubs where the members would not be infected 
by other views. It was the socialists who first insisted that the 
party member should distinguish himself from others by the 
modes of greeting and the forms of address. It was they who, by 
their organization of 'cells' and devices for the permanent supervi- 
sion of private life, created the prototype of the totalitarian party. 

By the time Hitler came to power, liberalism was dead in 
Germany. And it was socialism that had killed it. 

To many who have watched the transition from socialism to 
fascism at close quarters the connection between the two systems 
has become increasingly obvious, but in the democracies the 
majority of people still believe that socialism and freedom can 
be combined. They do not realize that democratic socialism, the 
great Utopia of the last few generations, is not only unachievable, 
but that to strive for it produces something utterly different - the 
very destruction of freedom itself. As has been aptly said: 'What 
has always made the state a hell on earth has been precisely that 
man has tried to make it his heaven.' 

It is disquieting to see in England and the United States today 
the same drawing together of forces and nearly the same contempt 
of all that is liberal in the old sense. 'Conservative socialism' was 
the slogan under which a large number of writers prepared the 
atmosphere in which National Socialism succeeded. It is 'conser- 
vative socialism' which is the dominant trend among us now. 



The liberal way of planning 

'Planning' owes its popularity largely to the fact that everybody 
desires, of course, that we should handle our common problems 
with as much foresight as possible. The dispute between the 
modern planners and the liberals is not on whether we ought to 
employ systematic thinking in planning our affairs. It is a dispute 
about what is the best way of so doing. The question is whether we 
should create conditions under which the knowledge and initia- 
tive of individuals are given the best scope so that they can plan 
most successfully; or whether we should direct and organize all 
economic activities according to a 'blueprint', that is, 'consciously 
direct the resources of society to conform to the planners' partic- 
ular views of who should have what'. 

It is important not to confuse opposition against the latter 
kind of planning with a dogmatic laissezfaire attitude. The liberal 
argument does not advocate leaving things just as they are; it 
favours making the best possible use of the forces of competi- 
tion as a means of coordinating human efforts. It is based on the 
conviction that, where effective competition can be created, it is a 
better way of guiding individual efforts than any other. It emphas- 
izes that in order to make competition work beneficially a care- 
fully thought-out legal framework is required, and that neither the 
past nor the existing legal rules are free from grave defects. 

Liberalism is opposed, however, to supplanting competition 
by inferior methods of guiding economic activity. And it regards 
competition as superior not only because in most circumstances 
it is the most efficient method known but because it is the only 
method which does not require the coercive or arbitrary intervention of 
authority. It dispenses with the need for 'conscious social control' 
and gives individuals a chance to decide whether the prospects of 



a particular occupation are sufficient to compensate for the disad- 
vantages connected with it. 

The successful use of competition does not preclude some types 
of government interference. For instance, to limit working hours, 
to require certain sanitary arrangements, to provide an extensive 
system of social services is fully compatible with the preservation 
of competition. There are, too, certain fields where the system of 
competition is impracticable. For example, the harmful effects of 
deforestation or of the smoke of factories cannot be confined to the 
owner of the properly in question. But the fact that we have to resort 
to direct regulation by authority where the conditions for the proper 
working of competition cannot be created does not prove that we 
should suppress competition where it can be made to function. 
To create conditions in which competition will be as effective as 
possible, to prevent fraud and deception, to break up monopolies 
- these tasks provide a wide and unquestioned field for state activity. 

This does not mean that it is possible to find some 'middle 
way' between competition and central direction, though nothing 
seems at first more plausible, or is more likely to appeal to reason- 
able people. Mere common sense proves a treacherous guide in 
this field. Although competition can bear some mixture of regula- 
tion, it cannot be combined with planning to any extent we like 
without ceasing to operate as an effective guide to production. 
Both competition and central direction become poor and ineffi- 
cient tools if they are incomplete, and a mixture of the two means 
that neither will work. 

Planning and competition can be combined only by planning 
for competition, not by planning against competition. The 
planning against which all our criticism is directed is solely the 
planning against competition. 



The great Utopia 

There can be no doubt that most of those in the democracies who 
demand a central direction of all economic activity still believe 
that socialism and individual freedom can be combined. Yet 
socialism was early recognized by many thinkers as the gravest 
threat to freedom. 

It is rarely remembered now that socialism in its beginnings 
was frankly authoritarian. It began quite openly as a reaction 
against the liberalism of the French Revolution. The French writers 
who laid its foundation had no doubt that their ideas could be put 
into practice only by a strong dictatorial government. The first of 
modern planners, Saint-Simon, predicted that those who did not 
obey his proposed planning boards would be 'treated as cattle'. 

Nobody saw more clearly than the great political thinker de 
Tocqueville that democracy stands in an irreconcilable conflict 
with socialism: 'Democracy extends the sphere of individual 
freedom,' he said. 'Democracy attaches all possible value to each 
man,' he said in 1848, 'while socialism makes each man a mere 
agent, a mere number. Democracy and socialism have nothing in 
common but one word: equality. But notice the difference: while 
democracy seeks equality in liberty, socialism seeks equality in 
restraint and servitude.' 

To allay these suspicions and to harness to its cart the strongest 
of all political motives - the craving for freedom - socialists began 
increasingly to make use of the promise of a 'new freedom'. 
Socialism was to bring 'economic freedom' without which polit- 
ical freedom was 'not worth having'. 

To make this argument sound plausible, the word 'freedom' 
was subjected to a subtle change in meaning. The word had 
formerly meant freedom from coercion, from the arbitrary power 



of other men. Now it was made to mean freedom from necessity, 
release from the compulsion of the circumstances which inevitably 
limit the range of choice of all of us. Freedom in this sense is, of 
course, merely another name for power or wealth. The demand for 
the new freedom was thus only another name for the old demand 
for a redistribution of wealth. 

The claim that a planned economy would produce a substan- 
tially larger output than the competitive system is being progres- 
sively abandoned by most students of the problem. Yet it is this 
false hope as much as anything which drives us along the road to 

Although our modern socialists' promise of greater freedom 
is genuine and sincere, in recent years observer after observer has 
been impressed by the unforeseen consequences of socialism, the 
extraordinary similarity in many respects of the conditions under 
'communism' and 'fascism'. As the writer Peter Drucker expressed 
it in 1939, 'the complete collapse of the belief in the attainability 
of freedom and equality through Marxism has forced Russia to 
travel the same road toward a totalitarian society of unfreedom 
and inequality which Germany has been following. Not that 
communism and fascism are essentially the same. Fascism is the 
stage reached after communism has proved an illusion, and it has 
proved as much an illusion in Russia as in pre-Hitler Germany.' 

No less significant is the intellectual outlook of the rank and 
file in the communist and fascist movements in Germany before 
1933- The relative ease with which a young communist could be 
converted into a Nazi or vice versa was well known, best of all to 
the propagandists of the two parties. The communists and Nazis 
clashed more frequently with each other than with other parties 
simply because they competed for the same type of mind and 



reserved for each other the hatred of the heretic. Their practice 
showed how closely they are related. To both, the real enemy, the 
man with whom they had nothing in common, was the liberal of 
the old type. While to the Nazi the communist and to the commu- 
nist the Nazi, and to both the socialist, are potential recruits 
made of the right timber, they both know that there can be no 
compromise between them and those who really believe in indi- 
vidual freedom. 

What is promised to us as the Road to Freedom is in fact the 
Highroad to Servitude. For it is not difficult to see what must be 
the consequences when democracy embarks upon a course of 
planning. The goal of the planning will be described by some such 
vague term as 'the general welfare'. There will be no real agree- 
ment as to the ends to be attained, and the effect of the people's 
agreeing that there must be central planning, without agreeing 
on the ends, will be rather as if a group of people were to commit 
themselves to take a journey together without agreeing where 
they want to go: with the result that they may all have to make a 
journey which most of them do not want at all. 

Democratic assemblies cannot function as planning agencies. 
They cannot produce agreement on everything - the whole direc- 
tion of the resources of the nation - for the number of possible 
courses of action will be legion. Even if a congress could, by 
proceeding step by step and compromising at each point, agree on 
some scheme, it would certainly in the end satisfy nobody. 

To draw up an economic plan in this fashion is even less 
possible than, for instance, successfully to plan a military 
campaign by democratic procedure. As in strategy, it would 
become inevitable to delegate the task to experts. And even if, 
by this expedient, a democracy should succeed in planning every 



sector of economic activity, it would still have to face the problem 
of integrating these separate plans into a unitary whole. There 
will be a stronger and stronger demand that some board or some 
single individual should be given powers to act on their own 
responsibility. The cry for an economic dictator is a characteristic 
stage in the movement toward planning. 

Thus the legislative body will be reduced to choosing the 
persons who are to have practically absolute power. The whole 
system will tend toward that kind of dictatorship in which the 
head of government is from time to time confirmed in his position 
by popular vote, but where he has all the power at his command to 
make certain that the vote will go in the direction that he desires. 

Planning leads to dictatorship because dictatorship is the most 
effective instrument of coercion and, as such, essential if central 
planning on a large scale is to be possible. There is no justification 
for the widespread belief that, so long as power is conferred by 
democratic procedure, it cannot be arbitrary; it is not the source of 
power which prevents it from being arbitrary; to be free from dictat- 
orial qualities, the power must also be limited. A true 'dictator- 
ship of the proletariat', even if democratic in form, if it undertook 
centrally to direct the economic system, would probably destroy 
personal freedom as completely as any autocracy has ever done. 

Individual freedom cannot be reconciled with the supremacy 
of one single purpose to which the whole of society is permanently 
subordinated. To a limited extent we ourselves experience this 
fact in wartime, when subordination of almost everything to the 
immediate and pressing need is the price at which we preserve our 
freedom in the long run. The fashionable phrases about doing for 
the purposes of peace what we have learned to do for the purposes 
of war are completely misleading, for it is sensible temporarily to 



sacrifice freedom in order to make it more secure in the future, 
but it is quite a different thing to sacrifice liberty permanently in 
the interests of a planned economy. 

To those who have watched the transition from socialism to 
fascism at close quarters, the connection between the two systems 
is obvious. The realization of the socialist programme means the 
destruction of freedom. Democratic socialism, the great Utopia of 
the last few generations, is simply not achievable. 

Why the worst get on top 

No doubt an American or English 'fascist' system would greatly 
differ from the Italian or German models; no doubt, if the trans- 
ition were effected without violence, we might expect to get a 
better type of leader. Yet this does not mean that our fascist 
system would in the end prove very different or much less intol- 
erable than its prototypes. There are strong reasons for believing 
that the worst features of the totalitarian systems are phenomena 
which totalitarianism is certain sooner or later to produce. 

Just as the democratic statesman who sets out to plan 
economic life will soon be confronted with the alternative of either 
assuming dictatorial powers or abandoning his plans, so the 
totalitarian leader would soon have to choose between disregard 
of ordinary morals and failure. It is for this reason that the unscru- 
pulous are likely to be more successful in a society tending toward 
totalitarianism. Who does not see this has not yet grasped the full 
width of the gulf which separates totalitarianism from the essen- 
tially individualist Western civilization. 

The totalitarian leader must collect around him a group which 
is prepared voluntarily to submit to that discipline they are to 



impose by force upon the rest of the people. That socialism can 
be put into practice only by methods of which most socialists 
disapprove is, of course, a lesson learned by many social reformers 
in the past. The old socialist parties were inhibited by their 
democratic ideals; they did not possess the ruthlessness required 
for the performance of their chosen task. It is characteristic that 
both in Germany and in Italy the success of fascism was preceded 
by the refusal of the socialist parties to take over the respons- 
ibilities of government. They were unwilling wholeheartedly to 
employ the methods to which they had pointed the way. They 
still hoped for the miracle of a majority's agreeing on a particular 
plan for the organization of the whole of society. Others had 
already learned the lesson that in a planned society the question 
can no longer be on what do a majority of the people agree but 
what the largest single group is whose members agree sufficiently 
to make unified direction of all affairs possible. 

There are three main reasons why such a numerous group, 
with fairly similar views, is not likely to be formed by the best but 
rather by the worst elements of any society. 

First, the higher the education and intelligence of individuals 
become, the more their tastes and views are differentiated. If we 
wish to find a high degree of uniformity in outlook, we have to 
descend to the regions of lower moral and intellectual standards 
where the more primitive instincts prevail. This does not mean 
that the majority of people have low moral standards; it merely 
means that the largest group of people whose values are very 
similar are the people with low standards. 

Second, since this group is not large enough to give sufficient 
weight to the leader's endeavours, he will have to increase their 
numbers by converting more to the same simple creed. He must 



gain the support of the docile and gullible, who have no strong 
convictions of their own but are ready to accept a ready-made 
system of values if it is only drummed into their ears sufficiently 
loudly and frequently. It will be those whose vague and imper- 
fectly formed ideas are easily swayed and whose passions and 
emotions are readily aroused who will thus swell the ranks of the 
totalitarian party. 

Third, to weld together a closely coherent body of supporters, 
the leader must appeal to a common human weakness. It seems 
to be easier for people to agree on a negative programme - on the 
hatred of an enemy, on the envy of the better off - than on any 
positive task. 

The contrast between the 'we' and the 'they' is consequently 
always employed by those who seek the allegiance of huge masses. 
The enemy may be internal, like the 'Jew' in Germany or the 
'kulak' in Russia, or he may be external. In any case, this technique 
has the great advantage of leaving the leader greater freedom of 
action than would almost any positive programme. 

Advancement within a totalitarian group or party depends 
largely on a willingness to do immoral things. The principle 
that the end justifies the means, which in individualist ethics is 
regarded as the denial of all morals, in collectivist ethics becomes 
necessarily the supreme rule. There is literally nothing which the 
consistent collectivist must not be prepared to do if it serves 'the 
good of the whole', because that is to him the only criterion of 
what ought to be done. 

Once you admit that the individual is merely a means to 
serve the ends of the higher entity called society or the nation, 
most of those features of totalitarianism which horrify us follow 
of necessity. From the collectivist standpoint intolerance and 



brutal suppression of dissent, deception and spying, the complete 
disregard of the life and happiness of the individual are essential 
and unavoidable. Acts which revolt all our feelings, such as the 
shooting of hostages or the killing of the old or sick, are treated 
as mere matters of expediency; the compulsory uprooting and 
transportation of hundreds of thousands becomes an instrument 
of policy approved by almost everybody except the victims. 

To be a useful assistant in the running of a totalitarian state, 
therefore, a man must be prepared to break every moral rule he 
has ever known if this seems necessary to achieve the end set for 
him. In the totalitarian machine there will be special opportuni- 
ties for the ruthless and unscrupulous. Neither the Gestapo nor 
the administration of a concentration camp, neither the Ministry 
of Propaganda nor the SA or SS (or their Russian counterparts) 
are suitable places for the exercise of humanitarian feelings. Yet it 
is through such positions that the road to the highest positions in 
the totalitarian state leads. 

A distinguished American economist, Professor Frank H. 
Knight, correctly notes that the authorities of a collectivist state 
'would have to do these things whether they wanted to or not: 
and the probability of the people in power being individuals who 
would dislike the possession and exercise of power is on a level 
with the probability that an extremely tender-hearted person 
would get the job of whipping master in a slave plantation'. 

A further point should be made here: collectivism means the 
end of truth. To make a totalitarian system function efficiently it is 
not enough that everybody should be forced to work for the ends 
selected by those in control; it is essential that the people should 
come to regard these ends as their own. This is brought about by 
propaganda and by complete control of all sources of information. 



The most effective way of making people accept the validity 
of the values they are to serve is to persuade them that they are 
really the same as those they have always held, but which were 
not properly understood or recognized before. And the most effi- 
cient technique to this end is to use the old words but change their 
meaning. Few traits of totalitarian regimes are at the same time 
so confusing to the superficial observer and yet so characteristic 
of the whole intellectual climate as this complete perversion of 

The worst sufferer in this respect is the word 'liberty'. It is a 
word used as freely in totalitarian states as elsewhere. Indeed, 
it could almost be said that wherever liberty as we know it has 
been destroyed, this has been done in the name of some new 
freedom promised to the people. Even among us we have planners 
who promise us a 'collective freedom', which is as misleading as 
anything said by totalitarian politicians. 'Collective freedom' is not 
the freedom of the members of society, but the unlimited freedom 
of the planner to do with society that which he pleases. This is the 
confusion of freedom with power carried to the extreme. 

It is not difficult to deprive the great majority of independent 
thought. But the minority who will retain an inclination to criti- 
cize must also be silenced. Public criticism or even expressions of 
doubt must be suppressed because they tend to weaken support 
of the regime. As Sidney and Beatrice Webb report of the position 
in every Russian enterprise: 'Whilst the work is in progress, any 
public expression of doubt that the plan will be successful is an act 
of disloyalty and even of treachery because of its possible effect on 
the will and efforts of the rest of the staff.' 

Control extends even to subjects which seem to have no polit- 
ical significance. The theory of relativity, for instance, has been 



opposed as a 'Semitic attack on the foundation of Christian and 
Nordic physics' and because it is 'in conflict with dialectical mate- 
rialism and Marxist dogma'. Every activity must derive its justifica- 
tion from conscious social purpose. There must be no spontaneous, 
unguided activity, because it might produce results which cannot 
be foreseen and for which the plan does not provide. 

The principle extends even to games and amusements. I leave 
it to the reader to guess where it was that chess players were 
officially exhorted that 'we must finish once and for all with the 
neutrality of chess. We must condemn once and for all the formula 
chess for the sake of chess.' 

Perhaps the most alarming fact is that contempt for intellectual 
liberty is not a thing which arises only once the totalitarian system 
is established, but can be found everywhere among those who have 
embraced a collectivist faith. The worst oppression is condoned if it 
is committed in the name of socialism. Intolerance of opposing ideas 
is openly extolled. The tragedy of collectivist thought is that while it 
starts out to make reason supreme, it ends by destroying reason. 

There is one aspect of the change in moral values brought 
about by the advance of collectivism which provides special food 
for thought. It is that the virtues which are held less and less in 
esteem in Britain and America are precisely those on which Anglo- 
Saxons justly prided themselves and in which they were gener- 
ally recognized to excel. These virtues were independence and 
self-reliance, individual initiative and local responsibility, the 
successful reliance on voluntary activity, non-interference with 
one's neighbour and tolerance of the different, and a healthy 
suspicion of power and authority. 

Almost all the traditions and institutions which have moulded 
the national character and the whole moral climate of England 



and America are those which the progress of collectivism and its 
centralistic tendencies are progressively destroying. 

Planning vs. the Rule of Law 

Nothing distinguishes more clearly a free country from a country 
under arbitrary government than the observance in the former of 
the great principles known as the Rule of Law. Stripped of tech- 
nicalities this means that government in all its actions is bound 
by rules fixed and announced beforehand - rules that make it 
possible to foresee with fair certainty how the authority will use 
its coercive powers in given circumstances and to plan one's 
individual affairs on the basis of this knowledge. Thus, within 
the known rules of the game, the individual is free to pursue his 
personal ends, certain that the powers of government will not be 
used deliberately to frustrate his efforts. 

Socialist economic planning necessarily involves the very 
opposite of this. The planning authority cannot tie itself down in 
advance to general rules which prevent arbitrariness. 

When the government has to decide how many pigs are to 
be raised or how many buses are to run, which coal-mines are 
to operate, or at what prices shoes are to be sold, these decisions 
cannot be settled for long periods in advance. They depend inevit- 
ably on the circumstances of the moment, and in making such 
decisions it will always be necessary to balance, one against the 
other, the interests of various persons and groups. 

In the end somebody's views will have to decide whose inter- 
ests are more important, and these views must become part of 
the law of the land. Hence the familiar fact that the more the state 
'plans', the more difficult planning becomes for the individual. 



The difference between the two kinds of rule is important. It 
is the same as that between providing signposts and commanding 
people which road to take. 

Moreover, under central planning the government cannot be 
impartial. The state ceases to be a piece of utilitarian machinery 
intended to help individuals in the fullest development of their indi- 
vidual personality and becomes an institution which deliberately 
discriminates between particular needs of different people, and 
allows one man to do what another must be prevented from doing. 
It must lay down by a legal rule how well off particular people shall 
be and what different people are to be allowed to have. 

The Rule of Law, the absence of legal privileges of particular 
people designated by authority, is what safeguards that equality 
before the law which is the opposite of arbitrary government. It 
is significant that socialists (and Nazis) have always protested 
against 'merely' formal justice, that they have objected to law 
which had no views on how well off particular people ought to be, 
that they have demanded a 'socialization of the law' and attacked 
the independence of judges. 

In a planned society the law must legalize what to all intents 
and purposes remains arbitrary action. If the law says that such 
a board or authority may do what it pleases, anything that board 
or authority does is legal - but its actions are certainly not subject 
to the Rule of Law. By giving the government unlimited powers 
the most arbitrary rule can be made legal; and in this way a demo- 
cracy may set up the most complete despotism imaginable. 

The Rule of Law was consciously evolved only during the 
liberal age and is one of its greatest achievements. It is the legal 
embodiment of freedom. As Immanuel Kant put it, 'Man is free if 
he needs obey no person but solely the laws.' 



Is planning 'inevitable'? 

It is revealing that few planners today are content to say that 
central planning is desirable. Most of them affirm that we now are 
compelled to it by circumstances beyond our control. 

One argument frequently heard is that the complexity of 
modern civilization creates new problems with which we cannot 
hope to deal effectively except by central planning. This argument 
is based upon a complete misapprehension of the working of 
competition. The very complexity of modern conditions makes 
competition the only method by which a coordination of affairs 
can be adequately achieved. 

There would be no difficulty about efficient control or 
planning were conditions so simple that a single person or board 
could effectively survey all the facts. But as the factors which have 
to be taken into account become numerous and complex, no one 
centre can keep track of them. The constantly changing conditions 
of demand and supply of different commodities can never be fully 
known or quickly enough disseminated by any one centre. 

Under competition - and under no other economic order - 
the price system automatically records all the relevant data. Entre- 
preneurs, by watching the movement of comparatively few prices, 
as an engineer watches a few dials, can adjust their activities to 
those of their fellows. 

Compared with this method of solving the economic problem 
- by decentralization plus automatic coordination through 
the price system - the method of central direction is incredibly 
clumsy, primitive, and limited in scope. It is no exaggeration to say 
that if we had had to rely on central planning for the growth of our 
industrial system, it would never have reached the degree of differ- 
entiation and flexibility it has attained. Modern civilization has 



been possible precisely because it did not have to be consciously 
created. The division of labour has gone far beyond what could 
have been planned. Any further growth in economic complexity, 
far from making central direction more necessary, makes it more 
important than ever that we should use the technique of competi- 
tion and not depend on conscious control. 

It is also argued that technological changes have made compe- 
tition impossible in a constantly increasing number of fields and 
that our only choice is between control of production by private 
monopolies and direction by the government. The growth of 
monopoly, however, seems not so much a necessary consequence 
of the advance of technology as the result of the policies pursued 
in most countries. 

The most comprehensive study of this situation is that by 
the Temporary National Economic Committee, which certainly 
cannot be accused of an unduly liberal bias. The committee 

The superior efficiency of large establishments has not 
been demonstrated; the advantages that are supposed to 
destroy competition have failed to manifest themselves in 
many fields . . . the conclusion that the advantage of large- 
scale production must lead inevitably to the abolition of 
competition cannot be accepted ... It should be noted, 
moreover, that monopoly is frequently attained through 
collusive agreement and promoted by public policies. 
When these agreements are invalidated and these policies 
reversed, competitive conditions can be restored. 

Anyone who has observed how aspiring monopolists regularly 
seek the assistance of the state to make their control effective can 
have little doubt that there is nothing inevitable about this devel- 



opment. In the United States a highly protectionist policy aided 
the growth of monopolies. In Germany the growth of cartels has 
since 1878 been systematically fostered by deliberate policy. It was 
here that, with the help of the state, the first great experiment in 
'scientific planning' and 'conscious organization of industry' led 
to the creation of giant monopolies. The suppression of competi- 
tion was a matter of deliberate policy in Germany, undertaken in 
the service of an ideal which we now call planning. 

Great danger lies in the policies of two powerful groups, organ- 
ized capital and organized labour, which support the monopol- 
istic organization of industry. The recent growth of monopoly is 
largely the result of a deliberate collaboration of organized capital 
and organized labour where the privileged groups of labour 
share in the monopoly profits at the expense of the community 
and particularly at the expense of those employed in the less well 
organized industries. However, there is no reason to believe that 
this movement is inevitable. 

The movement toward planning is the result of deliberate 
action. No external necessities force us to it. 

Can planning free us from care? 

Most planners who have seriously considered the practical aspects 
of their task have little doubt that a directed economy must be run 
on dictatorial lines, that the complex system of interrelated activi- 
ties must be directed by staffs of experts, with ultimate power in 
the hands of a commander-in-chief whose actions must not be 
fettered by democratic procedure. The consolation our planners 
offer us is that this authoritarian direction will apply 'only' to 
economic matters. This assurance is usually accompanied by the 



suggestion that, by giving up freedom in the less important aspects 
of our lives, we shall obtain freedom in the pursuit of higher values. 
On this ground people who abhor the idea of a political dictator- 
ship often clamour for a dictator in the economic field. 

The arguments used appeal to our best instincts. If planning 
really did free us from less important cares and so made it easier 
to render our existence one of plain living and high thinking, who 
would wish to belittle such an ideal? 

Unfortunately, purely economic ends cannot be separated 
from the other ends of life. What is misleadingly called the 
'economic motive' means merely the desire for general oppor- 
tunity. If we strive for money, it is because money offers us the 
widest choice in enjoying the fruits of our efforts - once earned, 
we are free to spend the money as we wish. 

Because it is through the limitation of our money incomes that 
we feel the restrictions which our relative poverty still imposes 
on us, many have come to hate money as the symbol of these 
restrictions. Actually, money is one of the greatest instruments 
of freedom ever invented by man. It is money which in existing 
society opens an astounding range of choice to the poor man - a 
range greater than that which not many generations ago was open 
to the wealthy. 

We shall better understand the significance of the service of 
money if we consider what it would really mean if, as so many 
socialists characteristically propose, the 'pecuniary motive' were 
largely displaced by 'non-economic incentives'. If all rewards, 
instead of being offered in money, were offered in the form of 
public distinctions, or privileges, positions of power over other 
men, better housing or food, opportunities for travel or education, 
this would merely mean that the recipient would no longer be 



allowed to choose, and that whoever fixed the reward would deter- 
mine not only its size but the way in which it should be enjoyed. 

The so-called economic freedom which the planners promise us 
means precisely that we are to be relieved of the necessity of solving 
our own economic problems and that the bitter choices which this 
often involves are to be made for us. Since under modern condi- 
tions we are for almost everything dependent on means which our 
fellow men provide, economic planning would involve direction of 
almost the whole of our life. There is hardly an aspect of it, from 
our primary needs to our relations with our family and friends, 
from the nature of our work to the use of our leisure, over which 
the planner would not exercise his 'conscious control'. 

The power of the planner over our private lives would be 
hardly less effective if the consumer were nominally free to spend 
his income as he pleased, for the authority would control produc- 

Our freedom of choice in a competitive society rests on the 
fact that, if one person refuses to satisfy our wishes, we can turn to 
another. But if we face a monopolist we are at his mercy. And an 
authority directing the whole economic system would be the most 
powerful monopolist imaginable. 

It would have complete power to decide what we are to be given 
and on what terms. It would not only decide what commodities 
and services are to be available and in what quantities; it would be 
able to direct their distribution between districts and groups and 
could, if it wished, discriminate between persons to any degree 
it liked. Not our own view, but somebody else's view of what we 
ought to like or dislike, would determine what we should get. 

The will of the authority would shape and 'guide' our daily 
lives even more in our position as producers. For most of us the 



time we spend at our work is a large part of our whole lives, and 
our job usually determines the place where and the people among 
whom we live. Hence some freedom in choosing our work is 
probably even more important for our happiness than freedom to 
spend our income during our hours of leisure. 

Even in the best of worlds this freedom will be limited. Few 
people ever have an abundance of choice of occupation. But what 
matters is that we have some choice, that we are not absolutely 
tied to a job which has been chosen for us, and that if one position 
becomes intolerable, or if we set our heart on another, there is 
always a way for the able, at some sacrifice, to achieve his goal. 
Nothing makes conditions more unbearable than the knowledge 
that no effort of ours can change them. It may be bad to be just a 
cog in a machine but it is infinitely worse if we can no longer leave 
it, if we are tied to our place and to the superiors who have been 
chosen for us. 

In our present world there is much that could be done to 
improve our opportunities of choice. But 'planning' would surely 
go in the opposite direction. Planning must control the entry 
into the different trades and occupations, or the terms of remun- 
eration, or both. In almost all known instances of planning, the 
establishment of such controls and restrictions was among the 
first measures taken. 

In a competitive society most things can be had at a price. It 
is often a cruelly high price. We must sacrifice one thing to attain 
another. The alternative, however, is not freedom of choice, but 
orders and prohibitions which must be obeyed. 

That people should wish to be relieved of the bitter choice 
which hard facts often impose on them is not surprising. But few 
want to be relieved through having the choice made for them by 



others. People just wish that the choice should not be necessary 
at all. And they are only too ready to believe that the choice is 
not really necessary, that it is imposed upon them merely by the 
particular economic system under which we live. What they resent 
is, in truth, that there is an economic problem. 

The wishful delusion that there is really no longer an economic 
problem has been furthered by the claim that a planned economy 
would produce a substantially larger output than the competitive 
system. This claim, however, is being progressively abandoned by 
most students of the problem. Even a good many economists with 
socialist views are now content to hope that a planned society 
will equal the efficiency of a competitive system. They advocate 
planning because it will enable us to secure a more equitable 
distribution of wealth. And it is indisputable that, if we want 
consciously to decide who is to have what, we must plan the whole 
economic system. 

But the question remains whether the price we should have to 
pay for the realization of somebody's ideal of justice is not bound 
to be more discontent and more oppression than was ever caused 
by the much abused free play of economic forces. 

For when a government undertakes to distribute the wealth, 
by what principles will it or ought it to be guided? Is there a 
definite answer to the innumerable questions of relative merits 
that will arise? 

Only one general principle, one simple rule, would provide 
such an answer: absolute equality of all individuals. If this were 
the goal, it would at least give the vague idea of distributive justice 
clear meaning. But people in general do not regard mechanical 
equality of this kind as desirable, and socialism promises not 
complete equality but 'greater equality'. 



This formula answers practically no questions. It does not 
free us from the necessity of deciding in every particular instance 
between the merits of particular individuals or groups, and it gives 
no help in that decision. All it tells us in effect is to take from the 
rich as much as we can. When it comes to the distribution of the 
spoils the problem is the same as if the formula of 'greater equality' 
had never been conceived. 

It is often said that political freedom is meaningless without 
economic freedom. This is true enough, but in a sense almost 
opposite from that in which the phrase is used by our planners. 
The economic freedom which is the prerequisite of any other 
freedom cannot be the freedom from economic care which the 
socialists promise us and which can be obtained only by relieving 
us of the power of choice. It must be that freedom of economic 
activity which, together with the right of choice, carries also the 
risk and responsibility of that right. 

Two kinds of security 

Like the spurious 'economic freedom', and with more justice, 
economic security is often represented as an indispensable condi- 
tion of real liberty. In a sense this is both true and important. Inde- 
pendence of mind or strength of character is rarely found among 
those who cannot be confident that they will make their way by 
their own effort. 

But there are two kinds of security: the certainty of a given 
minimum of sustenance for all and the security of a given standard 
of life, of the relative position which one person or group enjoys 
compared with others. 

There is no reason why, in a society which has reached the 



general level of wealth ours has, the first kind of security should 
not be guaranteed to all without endangering general freedom; 
that is: some minimum of food, shelter and clothing, sufficient to 
preserve health. Nor is there any reason why the state should not 
help to organize a comprehensive system of social insurance in 
providing for those common hazards of life against which few can 
make adequate provision. 

It is planning for security of the second kind which has such 
an insidious effect on liberty. It is planning designed to protect 
individuals or groups against diminutions of their incomes. 

If, as has become increasingly true, the members of each trade 
in which conditions improve are allowed to exclude others in 
order to secure to themselves the full gain in the form of higher 
wages or profits, those in the trades where demand has fallen off 
have nowhere to go, and every change results in large unemploy- 
ment. There can be little doubt that it is largely a consequence of 
the striving for security by these means in the last decades that 
unemployment and thus insecurity have so much increased. 

The utter hopelessness of the position of those who, in a 
society which has thus grown rigid, are left outside the range of 
sheltered occupation can be appreciated only by those who have 
experienced it. There has never been a more cruel exploitation of 
one class by another than that of the less fortunate members of a 
group of producers by the well-established. This has been made 
possible by the 'regulation' of competition. Few catchwords have 
done so much harm as the ideal of a 'stabilization' of particular 
prices or wages, which, while securing the income of some, makes 
the position of the rest more and more precarious. 

In England and America special privileges, especially in the 
form of the 'regulation' of competition, the 'stabilization' of 



particular prices and wages, have assumed increasing importance. 
With every grant of such security to one group the insecurity of 
the rest necessarily increases. If you guarantee to some a fixed part 
of a variable cake, the share left to the rest is bound to fluctuate 
proportionally more than the size of the whole. And the essential 
element of security which the competitive system offers, the great 
variety of opportunities, is more and more reduced. 

The general endeavour to achieve security by restrictive 
measures, supported by the state, has in the course of time 
produced a progressive transformation of society - a transforma- 
tion in which, as in so many other ways, Germany has led and the 
other countries have followed. This development has been hastened 
by another effect of socialist teaching, the deliberate disparagement 
of all activities involving economic risk and the moral opprobrium 
cast on the gains which make risks worth taking but which only few 
can win. 

We cannot blame our young men when they prefer the safe, 
salaried position to the risk of enterprise after they have heard 
from their earliest youth the former described as the superior, 
more unselfish and disinterested occupation. The younger gener- 
ation of today has grown up in a world in which, in school and 
press, the spirit of commercial enterprise has been represented 
as disreputable and the making of profit as immoral, where to 
employ 100 people is represented as exploitation but to command 
the same number as honourable. 

Older people may regard this as exaggeration, but the daily 
experience of the university teacher leaves little doubt that, as a 
result of anti-capitalist propaganda, values have already altered 
far in advance of the change in institutions which has so far taken 
place. The question is whether, by changing our institutions to 



satisfy the new demands, we shall not unwittingly destroy values 
which we still rate higher. 

The conflict with which we have to deal is a fundamental one 
between two irreconcilable types of social organization, which 
have often been described as the commercial and the military. 
In either both choice and risk rest with the individual or he is 
relieved of both. In the army, work and worker alike are allotted 
by authority, and this is the only system in which the individual 
can be conceded full economic security. This security is, however, 
inseparable from the restrictions on liberty and the hierarchical 
order of military life - it is the security of the barracks. 

In a society used to freedom it is unlikely that many people 
would be ready deliberately to purchase security at this price. 
But the policies which are followed now are nevertheless rapidly 
creating conditions in which the striving for security tends to 
become stronger than the love of freedom. 

If we are not to destroy individual freedom, competition must 
be left to function unobstructed. Let a uniform minimum be 
secured to everybody by all means; but let us admit at the same 
time that all claims for a privileged security of particular classes 
must lapse, that all excuses disappear for allowing particular 
groups to exclude newcomers from sharing their relative pros- 
perity in order to maintain a special standard of their own. 

There can be no question that adequate security against 
severe privation will have to be one of our main goals of policy. 
But nothing is more fatal than the present fashion of intellectual 
leaders of extolling security at the expense of freedom. It is essen- 
tial that we should re-learn frankly to face the fact that freedom 
can be had only at a price and that as individuals we must be 
prepared to make severe material sacrifices to preserve it. 



We must regain the conviction on which liberty in the Anglo- 
Saxon countries has been based and which Benjamin Franklin 
expressed in a phrase applicable to us as individuals no less than 
as nations: 'Those who would give up essential liberty to purchase 
a little temporary safety deserve neither liberty nor safety.' 

Toward a better world 

To build a better world, we must have the courage to make a new 
start. We must clear away the obstacles with which human folly 
has recently encumbered our path and release the creative energy 
of individuals. We must create conditions favourable to progress 
rather than 'planning progress'. 

It is not those who cry for more 'planning' who show the 
necessary courage, nor those who preach a 'New Order', which 
is no more than a continuation of the tendencies of the past 40 
years, and who can think of nothing better than to imitate Hitler. 
It is, indeed, those who cry loudest for a planned economy who are 
most completely under the sway of the ideas which have created 
this war and most of the evils from which we suffer. 

The guiding principle in any attempt to create a world of free 
men must be this: a policy of freedom for the individual is the only 
truly progressive policy. 


Originally published in Look magazine 

Reproduced from a booklet published by 
General Motors, Detroit, in the 'Thought Starter' series (no. 118) 




War forces "national planning" 

To permit total mobilization of your 
country's economy, you gladly surrender 
many freedoms. You know regimentation 
was forced by your country's enemies. 



Many want "planning" to stay . . . 

Arguments for a "peace production 
board" are heard before the war 
ends. Wartime "planners" who want 
to stay in power, encourage the idea. 





The "Planners" promise Utopias . . . . 

A rosy plan for farmers goes well in rural 
areas, a plan for industrial workers 
is popular in cities — and so on. Many 
new "planners" are elected to office 





but they can't agree on ONE Utopia 

With peace, a new legislature meets; 
but "win the war" unity is gone. The 
"planners" nearly come to blows. Each 
has his own pet plan, won't budge. 




And citizens can't agree either 

When the "planners" finally patch up 
a temporary plan months later, citizens 
in turn disagree. What the farmer 
likes, the factory worker doesn't tike. 





"Planners" hate to force agreement , . . 

Most "national planners" are well-mean- 
ing idealists, balk at any use of force. 
They hope for some miracle of public 
agreement as to their patchwork plan. 





They fry to "sell" the plan to all . . . 

In an unsuccessful effort to educate 
people to uniform views, "planners" 
establish a giant propaganda machine 
— which coming dictator wif/ find hondy. 





The gullible do find agreement 

Meanwhile, growing national confu- 
sion leads to protest meetings. The 
least educated — thrilled and con- 
vinced by fiery oratory, form a party. 





Confidence in "planners" fades .... 

The more that the "planners" improvise, 
the greater the disturbance to normal 
business. Everybody suffers. People now 
feel — rightly — that "planners" can't get 
things done! 





The "strong man" is given power . . . 

In desperation, "planners" authorize the 
new party leader to hammer out a plan 
and force its obedience. Later, they'll 
dispense with him— or so they think. 





The party takes over the country . . , 

By now, confusion is so great that 
obedience to the new leader must be 
obtained at all costs. Maybe you join 
the party yourself to aid national unity. 




A negative aim welds party unity . . . 

Early step of all dictators is to inflame 
the majority in common cause against 
some scapegoat minority. In Germany, 
the negative aim was Anti-Semitism. 




No one opposes the leader's plan . . . 

It would be suicide; new secret police are 
ruthless. Ability to force obedience always 
becomes the No. 1 virtue in the "planned 
state." Now ail freedom is gone. 




Your profession is "planned" . . . . 

The wider job choice promised by 
now defunct "planners" turns out to 
be a tragic farce. "Planners" never 
have delivered, never will be able to. 





Your wages are "planned" . . . . 

Divisions of the wage scale must 
be arbitrary and rigid. Running a 
"planned state" from central head- 
quarters is clumsy, unfair, inefficient. 



Your thinking is "planned" . . . . 

In the dictatorship, unintentionally 
created by the planners, there is no room 
for difference of opinion. Posters, 
radio, press — all tell you the same ties! 





T O 


Your recreation is "planned" .... 

It is no coincidence that sports and 
amusements have been carefully 
"planned" in all regimented nations. 
Once started, "planners" can't stop. 





Your disciplining is "planned" . . . . 

If you're fired from your job, it's apt to 
be by a firing squad. What used to be an 
error has now become a crime against 
the state. Thus ends the road to serfdoml 


The Intellectuals and Socialism 

A note on the text 

'The Intellectuals and Socialism' was first published in the 
University of Chicago Law Review, Vol. 16, No. 3, Spring 1949. It 
was reprinted in F. A. Hayek, Studies in Philosophy, Politics and 
Economics, Routledge and Kegan Paul, London, 1967. It was 
published as a booklet in the Studies in Social Theory Series by 
the Institute of Humane Studies, California, 1971. The text of this 
edition is taken from Studies in Philosophy, Politics and Economics. 
The copyright of 'The Intellectuals and Socialism' remains with 
the University of Chicago Law Review, and the essay is repub- 
lished here by kind permission. This essay was also previously 
published by the IEA in the Rediscovered Riches series. 


In the late Professor F. A. Hayek's 1949 essay, 'The Intellectuals 
and Socialism', the author's final paragraph warns: 'Unless we can 
make the philosophic foundations of a free society once more a 
living intellectual issue, and its implementation a task which chal- 
lenges the ingenuity and imagination of our liveliest minds, the 
prospects of freedom are indeed dark. But if we can regain that 
belief in the power of ideas which was the mark of liberalism at its 
best, the battle is not lost. The intellectual revival of liberalism is 
already under way in many parts of the world. Will it be in time?' 

Fortunately, Professor Hayek's warning was heeded, just in 
time. His colleagues in the Mont Pelerin Society, his students, and 
his admirers from around the world took his message to heart, 
and they have spent the decades since the publication of this essay 
honing their arguments for liberty, and transmitting these ideas 
through institutions, publications and conferences with a success 
undreamt of in 1949. 

For many of us, Hayek's brief essay was a call to action. In it, he 
explained the process by which ideas are developed and become 
widely accepted, and he noted why our own classical liberal ideas 
may not be as widely held, or as fashionable, as they deserve to be. 
For too long we had underestimated the power of the 'intellectual 
class' - the 'professional second-hand dealers in ideas', as Hayek 
refers to them - to shape the climate of public opinion. As Hayek 



pointed out, the parties of the Left directed most of their energies, 
either by design or circumstance, toward gaining the support 
of this intellectual elite - the journalists, teachers, ministers, 
lecturers, publicists, writers, and artists who were masters of the 
technique of conveying ideas. At the time of this essay Hayek said 
that most of us learn little about events or ideas except through 
this class (and with the growth of television, it's probably even 
less). The intellectuals have become gatekeepers for the informa- 
tion, views, and opinions that ultimately do reach us. Conservat- 
ives, by contrast, had concentrated on reaching and persuading 
individual voters. 

For many of us, this essay was a challenge to build up our 
own class of intellectuals made up of those who loved liberty. 
We trained, hired, networked, and supported academics, policy 
analysts, journalists, radio talk show hosts, and even political 
leaders who would shape public opinion and influence the 
politics of tomorrow. And in many areas we have succeeded in 
changing the climate of public opinion and changing the world. 
Communism has failed, the Berlin Wall has been torn down, and 
even left-of-centre politicians like [former] President Clinton 
and Prime Minister Blair are embracing the rhetoric of our clas- 
sical liberal solutions when talking of some of our modern social 
problems. I believe the irony would not be lost on Professor 

Clearly much remains to be done before we can enjoy a truly 
free society. And for guidance we should once again turn to 
Hayek. As he points out, much of the success socialism gained 
up until 1949 was not by engaging in a battle of conflicting 
ideals, but by contrasting the existing state of affairs with that 
one ideal of a possible future society which the socialists alone 



held up before the public. 'Very few of the other programmes 
which offered themselves provided genuine alternatives.' (p. 123.) 
Compromises were thus made somewhere between the socialist 
ideal and the existing state of affairs. The only questions for 
socialists were how fast and how far to proceed. Conservatives 
have learned this lesson: it is not enough to stop bad policies, we 
have to offer genuine alternatives. 

Since the original publication of 'The Intellectuals and 
Socialism' we have developed the philosophical foundations of a 
free society, thanks to Hayek, our friends at the IEA, and others. 
And we have built a class of intellectuals to translate these philo- 
sophical ideas to the public. However, we have not held up before 
the public our own vision of a future society built on liberty. And 
this is the task facing us as we approach the new millennium. As 
Hayek said, the task of constructing a free society can be exciting 
and fascinating. If we are to succeed, we must make the building 
of a free society once more an intellectual adventure and a deed of 

As an alumnus of the Institute of Economic Affairs, I particu- 
larly thank our good friends at the IEA for republishing this very 
special essay, and most importantly for the many courageous 
intellectual adventures they have undertaken. 




Hayek and the Second-hand Dealers in Ideas 

In April 1945 Reader's Digest published the condensed version 
of Friedrich Hayek's classic work The Road to Serfdom. For the first 
and still the only time in the history of the Digest, the condensed 
book was carried at the front of the magazine rather than the back. 

Among the many who read the condensed book was Antony 
Fisher. In his very early thirties, this former Battle of Britain 
pilot turned stockbroker turned farmer went to see Hayek at 
the London School of Economics to discuss his concern over the 
advance of socialism and collectivism in Britain. Fisher feared that 
the country for whom so many, including his father and brother, 
had died in two world wars in order that it should remain free was, 
in fact, becoming less and less free. He saw liberty threatened by 
the ever-growing power and scope of the state. The purpose of his 
visit to Hayek, the great architect of the revival of classical liberal 
ideas, was to ask what could be done about it. 

My central question was what, if anything, could he advise 
me to do to help get discussion and policy on the right lines 
. . . Hayek first warned me against wasting time - as I was 
then tempted - by taking up a political career. He explained 
his view that the decisive influence in the battle of ideas and 
policy was wielded by intellectuals whom he characterised 
as the 'second-hand dealers in ideas'. It was the dominant 
intellectuals from the Fabians onwards who had tilted 
the political debate in favour of growing government 



intervention with all that followed. If I shared the view that 
better ideas were not getting a fair hearing, his counsel was 
that I should join with others in forming a scholarly research 
organisation to supply intellectuals in universities, schools, 
journalism and broadcasting with authoritative studies 
of the economic theory of markets and its application to 
practical affairs. 1 

Fisher went on to make his fortune by introducing factory 
farming of chickens on the American model to Britain. His 
company, Buxted Chickens, changed the diet of his fellow coun- 
trymen, and made him rich enough to carry out Hayek's advice. 
He set up the Institute of Economic Affairs in 1955 with the view 

[T]hose carrying on intellectual work must have a 
considerable impact through newspapers, radio, television 
and so on, on the thinking of the average individual. 

Socialism was spread in this way and it is time we started to 
reverse the process? 

He thus set himself exactly the task which Hayek had recom- 
mended to him in 1945. 

Soon after that meeting with Fisher, Hayek expanded on his theory 
of the influence of intellectuals in an essay entitled 'The Intellec- 
tuals and Socialism', first published in the Chicago Law Review in 
1949 and now republished by the Institute of Economic Affairs. 

1 A. Fisher, Must History Repeat Itself?, Churchill Press, 1974, p. 103, quoted in R. 
Cockett, Thinking the Unthinkable, HarperCollins, London, 1995, pp. 123-4. 

2 Letter from Antony Fisher to Oliver Smedley, 22 May 1956, quoted in R. Cockett, 
op. cit., p. 131. Emphasis in original. 



According to Hayek, the intellectual is neither an original thinker 
nor an expert. Indeed he need not even be intelligent. What he 
does possess is: 

a) the ability to speak/write on a wide range of subjects; and 

b) a way of becoming familiar with new ideas earlier than his 

Let me attempt to summarise Hayek's insights: 

1. Pro-market ideas had failed to remain relevant and inspiring, 
thus opening the door to anti-market forces. 

2. People's knowledge of history plays a much greater role in the 
development of their political philosophy than we normally 
think. 3 

3. Practical men and women concerned with the minutiae of 
today's events tend to lose sight of long-term considerations. 

4. Be alert to special interests, especially those that, while 
claiming to be pro-free enterprise in general, always want to 
make exceptions in their own areas of expertise. 

5. The outcome of today's politics is already set, so look for 
leverage for tomorrow as a scholar or intellectual. 

6. The intellectual is the gatekeeper of ideas. 

7. The best pro-market people become businessmen, engineers, 
doctors and so on; the best anti-market people become 
intellectuals and scholars. 

8. Be Utopian and believe in the power of ideas. 

3 As Leonard P. Liggio, executive vice president of the Atlas Economic Research 
Foundation, often says, more people learn their economics from history than 
from economics. 



Hayek's primary example is the period 1850 to 1950, during 
which socialism was nowhere, at first, a working-class movement. 
There was always a long-term effort by the intellectuals before 
the working classes accepted socialism. Indeed all countries that 
have turned to socialism experienced an earlier phase in which for 
many years socialist ideas governed the thinking of more active 
intellectuals. Once you reach this phase, experience suggests, it 
is just a matter of time before the views of today's intellectuals 
become tomorrow's politics. 

'The Intellectuals and Socialism' was published in 1949, but, 
apart from one reference in one sentence, there is nothing to say it 
could not have been written forty years later, just before Hayek's 
death. It might have been written forty years earlier but for the 
fact that, as a young man, he felt the over-generous instincts of 
socialism. When Hayek penned his thoughts, socialism seemed 
triumphant across the world. Anybody of enlightened sensibility 
regarded themselves as of 'The Left'. To be of 'The Right' was to be 
morally deformed, foolish, or both. 

In Alan Bennett's 1968 play Forty Years On the headmaster of 
Albion House, a minor public school which represents Britain, 
asks: 'Why is it always the intelligent people who are socialists?' 4 
Hayek's answer, which he expressed in his last major work, The 
Fatal Conceit, was that 'intelligent people will tend to overvalue 
intelligence'. They think that everything worth knowing can be 
discovered by processes of intellectual examination and 'find it 
hard to believe that there can exist any useful knowledge that did 
not originate in deliberate experimentation'. They consequently 

4 A. Bennett, Forty Years On, first performance 31 October 1968; Faber and Faber, 
London, 1969, p. 58. 



neglect the 'traditional rules', the 'second endowment' of 'cultural 
evolution' which, for Hayek, included morals, especially 'our insti- 
tutions of property, freedom and justice'. They think that any 
imperfection can be corrected by 'rational coordination' and this 
leads them 'to be favourably disposed to the central economic 
planning and control that lie at the heart of socialism'. Thus, 
whether or not they call themselves socialists, 'the higher we 
climb up the ladder of intelligence . . . the more likely we are to 
encounter socialist convictions'. 5 

Only when you start to list all the different groups of intellectuals 
do you realise how many there are, how their role has grown in 
modern times, and how dependent we have become on them. The 
more obvious ones are those who are professionals at conveying 
a message but are amateurs when it comes to substance. They 
include the 'journalists, teachers, ministers, lecturers, publicists, 
radio commentators, writers of fiction, cartoonists, and artists'. 
However we should also note the role of 'professional men and 
technicians' (p. 107) who are listened to by others with respect on 
topics outside their competence because of their standing. The 
intellectuals decide what we hear, in what form we are to hear it 
and from what angle it is to be presented. They decide who will be 
heard and who will not be heard. The supremacy and pervasive- 
ness of television as the controlling medium of modern culture 
makes that even more true of our own day than it was in the 

There is an alarming sentence in this essay: '[I]n most parts 
of the Western World even the most determined opponents of 

5 F. Hayek, The Fatal Conceit: The Errors of Socialism, in W. W. Bartley (ed.), The Col- 
lected Works of Friedrich August Hayek, Routledge, London, Vol. 1, 1988, pp. 52-4. 



socialism derive from socialist sources their knowledge on most 
subjects on which they have no first-hand information' (p. 112). 
Division of knowledge is a part of the division of labour. Know- 
ledge, and its manipulation, are the bulk of much labour now. A 
majority earns its living in services of myriad sorts rather than in 
manufacturing or agriculture. 

A liberal, or as Hayek would always say, a Whig, cannot 
disagree with a socialist analysis in a field in which he has no 
knowledge. The disquieting theme of Hayek's argument is how the 
fragmentation of knowledge is a tactical boon to socialists. Experts 
in particular fields often gain 'rents' from state intervention and, 
while overtly free-market in their outlook elsewhere, are always 
quick to explain why the market does not work in their area. 

This was one of the reasons for establishing the IEA and its 
100-plus sister bodies around the world. Hayek also regarded the 
creation of the Mont Pelerin Society, which first met in 1947, as an 
opportunity for minds engaged in the fight against socialism to 
exchange ideas - meaning, by socialism, all those ideas devoted to 
empowering the state. The threat posed by the forces of coercion 
to those of voluntary association or spontaneous action is what 
concerned him. 

The struggle has become more difficult as policy makers have 
become less and less willing to identify themselves explicitly as 
socialists. A review of a book on socialism which appeared in 1885 

Socialism is the hobby of the day. Platform and study 
resound with the word, and street and debating society 
inscribe it on their banners. 6 

6 Review of Contemporary Socialism by John Rae, Charity Organisation Review, Char- 
ity Organisation Society, London, October 1885. 



How unlike the home life of our own New Labour! Socialism 
has become the V word, and was not mentioned in the Labour 
Party's 1997 election manifesto. 7 

Socialism survives, however, by transmuting itself into new 
forms. State-run enterprises are now frowned upon, but the ever- 
expanding volume of regulation - financial, environmental, health 
and safety - serves to empower the state by other means. 

Part of Hayek's charm is the pull of his sheer geniality. He is 
generous and mannerly in acknowledging that most socialists 
have benign intentions. They are blind to the real flaws of their 
recipes. Typically, Hayek ends with a point in their favour: '[I]t 
was their courage to be Utopian which gained them the support 
of the intellectuals and therefore an influence on public opinion' 
(p. 129). Those who concern themselves exclusively with what 
seems practicable are marginalised by the greater influence of 
prevailing opinion. 

I commend to you Hayek's urge not to seek compromises. We 
can leave that to the politicians. 'Free trade and freedom of oppor- 
tunity are ideals which still may arouse the imaginations of large 
numbers, but a mere "reasonable freedom of trade" or a mere 
"relaxation of controls" is neither intellectually respectable nor 
likely to inspire any enthusiasm' (p. 129). 

Most of the readers of this paper will be Hayek's 'second-hand 
dealers in ideas'. Conceit makes us all prone to believe we are 
original thinkers, but Hayek explains that we are mostly transmit- 
ters of ideas borrowed from earlier minds (hence second-hand, in 

7 New Labour: Because Britain Deserves Better, The Labour Party, London, 1997. On 
the contrary, the manifesto complained that: 'Our system of government is cen- 
tralised, inefficient and bureaucratic' 



a non-pejorative sense). Those scholars who really are the founts of 
new ideas are far more rare than we all suppose. However, Hayek 
argues that we, and the world, are governed by ideas and that we 
can only expand our political and policy horizons by deploying 

He was supported in this view - and it was probably the only 
view they shared - by John Maynard Keynes. In 1936 Keynes had 
concluded his most famous book, The General Theory of Employ- 
ment, Interest and Money, with these ringing words: 

. . . the ideas of economists and political philosophers, both 
when they are right and when they are wrong, are more 
powerful than is commonly understood. Indeed the world is 
ruled by little else. Practical men, who believe themselves to 
be quite exempt from any intellectual influences, are usually 
the slaves of some defunct economist . . . Soon or late, it is 
ideas, not vested interests, which are dangerous for good or 
evil. 8 

Of course, this was true of no one more than of Keynes himself, 
whose followers were wreaking havoc with the world's economies 
long after he had become defunct. But it was also true of Hayek. 
It was Hayek's great good fortune to live long enough to see his 
own ideas enter the mainstream of public policy debate. They 
were not always attributed to him: they were described as Thatch- 
erism, or Adam-Smith liberalism, or neo-conservatism, but he 
was responsible for their re-emergence, whether credited or not. 
We received a striking demonstration of this at the IEA in 1996 
when we invited Donald Brash, the Governor of the Reserve Bank 

8 J. M. Keynes, The General Theory of Employment, Interest and Money, Macmillan, 
London, p. 383. 



of New Zealand, to give the prestigious Annual Hayek Memorial 
Lecture on the subject of 'New Zealand's Remarkable Reforms'. 
He admitted that, although 'the New Zealand reforms have a 
distinctly Hayekian flavour', the architects of them were scarcely 
aware of Hayek at all, and Brash himself had never read a word of 
Hayek before being asked to give the lecture. 9 

The IEA can claim some victories in the increasing awareness 
of classical liberal ideas and ideals. It is hard to measure our influ- 
ence, yet, if we awaken some young scholar to the possibility that 
the paradigms or conventions of a discipline may be flawed, we 
can change the life of that mind for ever. If we convince a young 
journalist he can do more good, and have more fun, by criticising 
the remnants of our socialist inheritance, we can change that 
life. If we persuade a young politician he can harass the forces 
of inertia by tackling privilege and bureaucracy, we change the 
course of that life too. The IEA continues in its mission to move 
around the furniture in the minds of intellectuals. That includes 
you, probably. 


9 D. T. Brash, New Zealand's Remarkable Reforms, Occasional Paper 100, Institute of 
Economic Affairs, London, 1996, p. 17. 




In all democratic countries, in the United States even more than 
elsewhere, a strong belief prevails that the influence of the intellec- 
tuals on politics is negligible. This is no doubt true of the power of 
intellectuals to make their peculiar opinions of the moment influ- 
ence decisions, of the extent to which they can sway the popular 
vote on questions on which they differ from the current views of 
the masses. Yet over somewhat longer periods they have probably 
never exercised so great an influence as they do today in those 
countries. This power they wield by shaping public opinion. 

In the light of recent history it is somewhat curious that this 
decisive power of the professional second-hand dealers in ideas 
should not yet be more generally recognised. The political devel- 
opment of the Western world during the last hundred years 
furnishes the clearest demonstration. Socialism has never and 
nowhere been at first a working-class movement. It is by no means 
an obvious remedy for the obvious evil which the interests of that 
class will necessarily demand. It is a construction of theorists, 
deriving from certain tendencies of abstract thought with which 
for a long time only the intellectuals were familiar; and it required 
long efforts by the intellectuals before the working classes could 
be persuaded to adopt it as their programme. 



In every country that has moved toward socialism, the phase of 
the development in which socialism becomes a determining influ- 
ence on politics has been precededfor many years by a period during 
which socialist ideals governed the thinking of the more active intel- 
lectuals. In Germany this stage had been reached towards the end 
of the last century; in England and France, about the time of World 
War I. To the casual observer it would seem as if the United States 
had reached this phase after World War II and that the attraction 
of a planned and directed economic system is now as strong among 
the American intellectuals as it ever was among their German or 
English fellows. Experience suggests that, once this phase has been 
reached, it is merely a question of time until the views now held by 
the intellectuals become the governing force of politics. 

The character of the process by which the views of the intel- 
lectuals influence the politics of tomorrow is therefore of much 
more than academic interest. Whether we merely wish to foresee 
or attempt to influence the course of events, it is a factor of much 
greater importance than is generally understood. What to the 
contemporary observer appears as the battle of conflicting inter- 
ests has indeed often been decided long before in a clash of ideas 
confined to narrow circles. Paradoxically enough, however, in 
general the parties of the Left have done most to spread the belief 
that it was the numerical strength of the opposing material inter- 
ests which decided political issues, whereas in practice these same 
parties have regularly and successfully acted as if they understood 
the key position of the intellectuals. Whether by design or driven 
by the force of circumstances, they have always directed their 
main effort towards gaining the support of this 'elite', while the 
more conservative groups have acted, as regularly but unsuccess- 
fully, on a more naive view of mass democracy and have usually 



vainly tried directly to reach and to persuade the individual voter. 

The term 'intellectuals', however, does not at once convey a true 
picture of the large class to which we refer, and the fact that we 
have no better name by which to describe what we have called the 
second-hand dealers in ideas is not the least of the reasons why 
their power is not better understood. Even persons who use the 
word 'intellectual' mainly as a term of abuse are still inclined to 
withhold it from many who undoubtedly perform that character- 
istic function. This is neither that of the original thinker nor that 
of the scholar or expert in a particular field of thought. The typical 
intellectual need be neither: he need not possess special know- 
ledge of anything in particular, nor need he even be particularly 
intelligent, to perform his role as intermediary in the spreading of 
ideas. What qualifies him for his job is the wide range of subjects 
on which he can readily talk and write, and a position or habits 
through which he becomes acquainted with new ideas sooner 
than those to whom he addresses himself. 

Until one begins to list all the professions and activities which 
belong to this class, it is difficult to realise how numerous it is, 
how the scope for its activities constantly increases in modern 
society, and how dependent on it we all have become. The class 
does not consist only of journalists, teachers, ministers, lecturers, 
publicists, radio commentators, writers of fiction, cartoonists, and 
artists - all of whom may be masters of the technique of conveying 
ideas but are usually amateurs so far as the substance of what they 
convey is concerned. The class also includes many professional 
men and technicians, such as scientists and doctors, who through 



their habitual intercourse with the printed word become carriers of 
new ideas outside their own fields and who, because of their expert 
knowledge of their own subjects, are listened to with respect on 
most others. There is little that the ordinary man of today learns 
about events or ideas except through the medium of this class; and 
outside our special fields of work we are in this respect almost all 
ordinary men, dependent for our information and instruction on 
those who make it their job to keep abreast of opinion. It is the 
intellectuals in this sense who decide what views and opinions 
are to reach us, which facts are important enough to be told to us, 
and in what form and from what angle they are to be presented. 
Whether we shall ever learn of the results of the work of the expert 
and the original thinker depends mainly on their decision. 

The layman, perhaps, is not fully aware to what extent even 
the popular reputations of scientists and scholars are made by 
that class and are inevitably affected by its views on subjects which 
have little to do with the merits of the real achievements. And 
it is specially significant for our problem that every scholar can 
probably name several instances from his field of men who have 
undeservedly achieved a popular reputation as great scientists 
solely because they hold what the intellectuals regard as 'progres- 
sive' political views; but I have yet to come across a single instance 
where such a scientific pseudo-reputation has been bestowed 
for political reason on a scholar of more conservative leanings. 
This creation of reputations by the intellectuals is particularly 
important in the fields where the results of expert studies are not 
used by other specialists but depend on the political decision of 
the public at large. There is indeed scarcely a better illustration of 
this than the attitude which professional economists have taken to 
the growth of such doctrines as socialism or protectionism. There 



was probably at no time a majority of economists, who were recog- 
nised as such by their peers, favourable to socialism (or, for that 
matter, to protection). In all probability it is even true to say that 
no other similar group of students contains so high a proportion 
of its members decidedly opposed to socialism (or protection). 
This is the more significant as in recent times it is as likely as not 
that it was an early interest in socialist schemes for reform which 
led a man to choose economics for his profession. Yet it is not the 
predominant views of the experts but the views of a minority, 
mostly of rather doubtful standing in their profession, which are 
taken up and spread by the intellectuals. 

The all-pervasive influence of the intellectuals in contemporary 
society is still further strengthened by the growing importance of 
'organisation'. It is a common but probably mistaken belief that 
the increase of organisation increases the influence of the expert 
or specialist. This may be true of the expert administrator and 
organiser, if there are such people, but hardly of the expert in any 
particular field of knowledge. It is rather the person whose general 
knowledge is supposed to qualify him to appreciate expert testi- 
mony, and to judge between the experts from different fields, 
whose power is enhanced. The point which is important for us, 
however, is that the scholar who becomes a university president, 
the scientist who takes charge of an institute or foundation, the 
scholar who becomes an editor or the active promoter of an 
organisation serving a particular cause, all rapidly cease to be 
scholars or experts and become intellectuals in our sense, people 
who judge all issues not by their specific merits but, in the char- 
acteristic manner of intellectuals, solely in the light of certain 
fashionable general ideas. The number of such institutions which 
breed intellectuals and increase their number and powers grows 



every day. Almost all the 'experts' in the mere technique of getting 
knowledge over are, with respect to the subject matter which they 
handle, intellectuals and not experts. 

In the sense in which we are using the term, the intellectuals 
are in fact a fairly new phenomenon of history. Though nobody 
will regret that education has ceased to be a privilege of the prop- 
ertied classes, the fact that the propertied classes are no longer the 
best educated and the fact that the large number of people who 
owe their position solely to their general education do not possess 
that experience of the working of the economic system which 
the administration of property gives, are important for under- 
standing the role of the intellectual. Professor Schumpeter, who 
has devoted an illuminating chapter of his Capitalism, Socialism, 
and Democracy to some aspects of our problem, has not unfairly 
stressed that it is the absence of direct responsibility for prac- 
tical affairs and the consequent absence of first-hand knowledge 
of them which distinguishes the typical intellectual from other 
people who also wield the power of the spoken and written word. 
It would lead too far, however, to examine here further the devel- 
opment of this class and the curious claim which has recently been 
advanced by one of its theorists that it was the only one whose 
views were not decidedly influenced by its own economic inter- 
ests. One of the important points that would have to be examined 
in such a discussion would be how far the growth of this class has 
been artificially stimulated by the law of copyright. 1 

i It would be interesting to discover how far a seriously critical view of the benefits 
to society of the law of copyright, or the expression of doubts about the public in- 
terest in the existence of a class which makes its living from the writing of books, 
would have a chance of being publicly stated in a society in which the channels of 
expression are so largely controlled by people who have a vested interest in the 
existing situation. 




It is not surprising that the real scholar or expert and the prac- 
tical man of affairs often feel contemptuous about the intellec- 
tual, are disinclined to recognise his power, and are resentful 
when they discover it. Individually they find the intellectuals 
mostly to be people who understand nothing in particular espe- 
cially well and whose judgement on matters they themselves 
understand shows little sign of special wisdom. But it would be 
a fatal mistake to underestimate their power for this reason. Even 
though their knowledge may be often superficial and their intelli- 
gence limited, this does not alter the fact that it is their judgement 
which mainly determines the views on which society will act in the 
not too distant future. It is no exaggeration to say that, once the 
more active part of the intellectuals has been converted to a set 
of beliefs, the process by which these become generally accepted 
is almost automatic and irresistible. These intellectuals are the 
organs which modern society has developed for spreading know- 
ledge and ideas, and it is their convictions and opinions which 
operate as the sieve through which all new conceptions must pass 
before they can reach the masses. 

It is of the nature of the intellectual's job that he must use his 
own knowledge and convictions in performing his daily task. He 
occupies his position because he possesses, or has had to deal from 
day to day with, knowledge which his employer in general does 
not possess, and his activities can therefore be directed by others 
only to a limited extent. And just because the intellectuals are 
mostly intellectually honest, it is inevitable that they should follow 
their own convictions whenever they have discretion and that 
they should give a corresponding slant to everything that passes 
through their hands. Even where the direction of policy is in the 



hands of men of affairs of different views, the execution of policy 
will in general be in the hands of intellectuals, and it is frequently 
the decision on the detail which determines the net effect. We 
find this illustrated in almost all fields of contemporary society. 
Newspapers in 'capitalist' ownership, universities presided over 
by 'reactionary' governing bodies, broadcasting systems owned 
by conservative governments, have all been known to influence 
public opinion in the direction of socialism, because this was the 
conviction of the personnel. This has often happened not only in 
spite of, but perhaps even because of, the attempts of those at the 
top to control opinion and to impose principles of orthodoxy. 

The effect of this filtering of ideas through the convictions of 
a class which is constitutionally disposed to certain views is by no 
means confined to the masses. Outside his special field the expert 
is generally no less dependent on this class and scarcely less influ- 
enced by their selection. The result of this is that today in most 
parts of the Western world even the most determined opponents 
of socialism derive from socialist sources their knowledge on most 
subjects on which they have no first-hand information. With 
many of the more general preconceptions of socialist thought, the 
connection of their more practical proposals is by no means at 
once obvious; in consequence, many men who believe themselves 
to be determined opponents of that system of thought become in 
fact effective spreaders of its ideas. Who does not know the prac- 
tical man who in his own field denounces socialism as 'pernicious 
rot' but, when he steps outside his subject, spouts socialism like 
any Left journalist? 

In no other field has the predominant influence of the socialist 
intellectuals been felt more strongly during the last hundred years 
than in the contacts between different national civilisations. It 



would go far beyond the limits of this article to trace the causes 
and significance of the highly important fact that in the modern 
world the intellectuals provide almost the only approach to an 
international community. It is this which mainly accounts for 
the extraordinary spectacle that for generations the supposedly 
'capitalist' West has been lending its moral and material support 
almost exclusively to those ideological movements in the countries 
farther east which aimed at undermining Western civilisation 
and that, at the same time, the information which the Western 
public has obtained about events in Central and Eastern Europe 
has almost inevitably been coloured by a socialist bias. Many of 
the 'educational' activities of the American forces of occupation 
in Germany have furnished clear and recent examples of this 


A proper understanding of the reasons which tend to incline 
so many of the intellectuals towards socialism is thus most 
important. The first point here which those who do not share this 
bias ought to face frankly is that it is neither selfish interests nor 
evil intentions but mostly honest convictions and good intentions 
which determine the intellectuals' views. In fact, it is necessary to 
recognise that on the whole the typical intellectual is today more 
likely to be a socialist the more he is guided by good will and intel- 
ligence, and that on the plane of purely intellectual argument he 
will generally be able to make out a better case than the majority 
of his opponents within his class. If we still think him wrong, we 
must recognise that it may be genuine error which leads the well- 
meaning and intelligent people who occupy those key positions 



in our society to spread views which to us appear a threat to our 
civilisation. 2 Nothing could be more important than to try to 
understand the sources of this error in order that we should be 
able to counter it. Yet those who are generally regarded as the 
representatives of the existing order and who believe that they 
comprehend the dangers of socialism are usually very far from 
such understanding. They tend to regard the socialist intellectuals 
as nothing more than a pernicious bunch of highbrow radicals 
without appreciating their influence and, by their whole attitude 
to them, tend to drive them even further into opposition to the 
existing order. 

If we are to understand this peculiar bias of a large section of 
the intellectuals, we must be clear about two points. The first is 
that they generally judge all particular issues exclusively in the 
light of certain general ideas; the second, that the characteristic 
errors of any age are frequently derived from some genuine new 
truths it has discovered, and they are erroneous applications of 
new generalisations which have proved their value in other fields. 
The conclusion to which we shall be led by a full consideration of 
these facts will be that the effective refutation of such errors will 
frequently require further intellectual advance, and often advance 
on points which are very abstract and may seem very remote from 
the practical issues. 

It is perhaps the most characteristic feature of the intellectual 
that he judges new ideas not by their specific merits but by the 
readiness with which they fit into his general conceptions, into the 

2 It was therefore not (as has been suggested by one reviewer of The Road to Serf- 
dom, Professor J. Schumpeter) 'politeness to a fault' but profound conviction of 
the importance of this which made me, in Professor Schumpeter's words, 'hardly 
ever attribute to opponents anything beyond intellectual error'. 



picture of the world which he regards as modern or advanced. It 
is through their influence on him and on his choice of opinions on 
particular issues that the power of ideas for good and evil grows in 
proportion to their generality, abstractness, and even vagueness. 
As he knows little about the particular issues, his criterion must 
be consistency with his other views and suitability for combining 
into a coherent picture of the world. Yet this selection from the 
multitude of new ideas presenting themselves at every moment 
creates the characteristic climate of opinion, the dominant Weltan- 
schauung of a period, which will be favourable to the reception of 
some opinions and unfavourable to others and which will make 
the intellectual readily accept one conclusion and reject another 
without a real understanding of the issues. 

In some respects the intellectual is indeed closer to the philo- 
sopher than to any specialist, and the philosopher is in more than 
one sense a sort of prince among the intellectuals. Although his 
influence is farther removed from practical affairs and correspond- 
ingly slower and more difficult to trace than that of the ordinary 
intellectual, it is of the same kind and in the long run even more 
powerful than that of the latter. It is the same endeavour towards 
a synthesis, pursued more methodically, the same judgement 
of particular views in so far as they fit into a general system of 
thought rather than by their specific merits, the same striving 
after a consistent world view, which for both forms the main basis 
for accepting or rejecting ideas. For this reason the philosopher 
has probably a greater influence over the intellectuals than any 
other scholar or scientist and, more than anyone else, determines 
the manner in which the intellectuals exercise their censorship 
function. The popular influence of the scientific specialist begins to 
rival that of the philosopher only when he ceases to be a specialist 



and commences to philosophise about the progress of his subject 
- and usually only after he has been taken up by the intellectuals 
for reasons which have little to do with his scientific eminence. 

The 'climate of opinion' of any period is thus essentially a set 
of very general preconceptions by which the intellectual judges 
the importance of new facts and opinions. These preconceptions 
are mainly applications to what seem to him the most significant 
aspects of scientific achievements, a transfer to other fields of 
what has particularly impressed him in the work of the specialists. 
One could give a long list of such intellectual fashions and catch- 
words which in the course of two or three generations have in 
turn dominated the thinking of the intellectuals. Whether it was 
the 'historical approach' or the theory of evolution, nineteenth- 
century determinism and the belief in the predominant influence 
of environment as against heredity, the theory of relativity or the 
belief in the power of the unconscious - every one of these general 
conceptions has been made the touchstone by which innovations 
in different fields have been tested. It seems as if the less specific 
or precise (or the less understood) these ideas are, the wider may 
be their influence. Sometimes it is no more than a vague impres- 
sion rarely put into words which thus wields a profound influence. 
Such beliefs as that deliberate control or conscious organisation is 
also in social affairs always superior to the results of spontaneous 
processes which are not directed by a human mind, or that any 
order based on a plan laid down beforehand must be better than 
one formed by the balancing of opposing forces, have in this way 
profoundly affected political development. 

Only apparently different is the role of the intellectuals where 
the development of more properly social ideas is concerned. Here 
their peculiar propensities manifest themselves in making shibbo- 



leths of abstractions, in rationalising and carrying to extremes 
certain ambitions which spring from the normal intercourse of 
men. Since democracy is a good thing, the further the democratic 
principle can be carried, the better it appears to them. The most 
powerful of these general ideas which have shaped political devel- 
opment in recent times is of course the ideal of material equality. 
It is, characteristically, not one of the spontaneously grown moral 
convictions, first applied in the relations between particular indi- 
viduals, but an intellectual construction originally conceived in 
the abstract and of doubtful meaning or application in particular 
instances. Nevertheless, it has operated strongly as a principle of 
selection among the alternative courses of social policy, exercising 
a persistent pressure towards an arrangement of social affairs 
which nobody clearly conceives. That a particular measure tends 
to bring about greater equality has come to be regarded as so 
strong a recommendation that little else will be considered. Since 
on each particular issue it is this one aspect on which those who 
guide opinion have a definite conviction, equality has determined 
social change even more strongly than its advocates intended. 

Not only moral ideals act in this manner, however. Sometimes 
the attitudes of the intellectuals towards the problems of social 
order may be the consequence of advances in purely scientific 
knowledge, and it is in these instances that their erroneous views 
on particular issues may for a time seem to have all the prestige of 
the latest scientific achievements behind them. It is not in itself 
surprising that a genuine advance of knowledge should in this 
manner become on occasion a source of new error. If no false 
conclusions followed from new generalisations, they would be 
final truths which would never need revision. Although as a rule 
such a new generalisation will merely share the false consequences 



which can be drawn from it with the views which were held 
before, and thus not lead to new error, it is quite likely that a new 
theory, just as its value is shown by the valid new conclusions to 
which it leads, will produce other new conclusions which further 
advance will show to have been erroneous. But in such an instance 
a false belief will appear with all the prestige of the latest scien- 
tific knowledge supporting it. Although in the particular field to 
which this belief applies all the scientific evidence may be against 
it, it will nevertheless, before the tribunal of the intellectuals and 
in the light of the ideas which govern their thinking, be selected 
as the view which is best in accord with the spirit of the time. The 
specialists who will thus achieve public fame and wide influence 
will thus not be those who have gained recognition by their peers 
but will often be men whom the other experts regard as cranks, 
amateurs, or even frauds, but who in the eyes of the general public 
nevertheless become the best known exponents of their subject. 

In particular, there can be little doubt that the manner in 
which during the last hundred years man has learned to organise 
the forces of nature has contributed a great deal towards the 
creation of the belief that a similar control of the forces of society 
would bring comparable improvements in human conditions. 
That, with the application of engineering techniques, the direc- 
tion of all forms of human activity according to a single coherent 
plan should prove to be as successful in society as it has been in 
innumerable engineering tasks, is too plausible a conclusion not 
to seduce most of those who are elated by the achievement of the 
natural sciences. It must indeed be admitted both that it would 
require powerful arguments to counter the strong presumption 
in favour of such a conclusion and that these arguments have not 
yet been adequately stated. It is not sufficient to point out the 



defects of particular proposals based on this kind of reasoning. 
The argument will not lose its force until it has been conclusively 
shown why what has proved so eminently successful in producing 
advances in so many fields should have limits to its usefulness and 
become positively harmful if extended beyond these limits. This is 
a task which has not yet been satisfactorily performed and which 
will have to be achieved before this particular impulse towards 
socialism can be removed. 

This, of course, is only one of many instances where further 
intellectual advance is needed if the harmful ideas at present 
current are to be refuted and where the course which we shall 
travel will ultimately be decided by the discussion of very abstract 
issues. It is not enough for the man of affairs to be sure, from 
his intimate knowledge of a particular field, that the theories of 
socialism which are derived from more general ideas will prove 
impracticable. He may be perfectly right, and yet his resistance 
will be overwhelmed and all the sorry consequences which he 
foresees will follow if he is not supported by an effective refutation 
of the idees meres. So long as the intellectual gets the better of the 
general argument, the most valid objections to the specific issue 
will be brushed aside. 


This is not the whole story, however. The forces which influ- 
ence recruitment to the ranks of the intellectuals operate in the 
same direction and help to explain why so many of the most 
able among them lean towards socialism. There are of course 
as many differences of opinion among intellectuals as among 
other groups of people; but it seems to be true that it is on the 



whole the more active, intelligent, and original men among the 
intellectuals who most frequently incline towards socialism, 
while its opponents are often of an inferior calibre. This is true 
particularly during the early stages of the infiltration of socialist 
ideas; later, although outside intellectual circles it may still be 
an act of courage to profess socialist convictions, the pressure of 
opinion among intellectuals will often be so strongly in favour of 
socialism that it requires more strength and independence for a 
man to resist it than to join in what his fellows regard as modern 
views. Nobody, for instance, who is familiar with large numbers 
of university faculties (and from this point of view the majority 
of university teachers probably have to be classed as intellectuals 
rather than as experts) can remain oblivious to the fact that the 
most brilliant and successful teachers are today more likely than 
not to be socialists, while those who hold more conservative 
political views are as frequently mediocrities. This is of course 
by itself an important factor leading the younger generation into 
the socialist camp. 

The socialist will, of course, see in this merely a proof that 
the more intelligent person is today bound to become a socialist. 
But this is far from being the necessary or even the most likely 
explanation. The main reason for this state of affairs is probably 
that, for the exceptionally able man who accepts the present order 
of society, a multitude of other avenues to influence and power 
are open, while to the disaffected and dissatisfied an intellectual 
career is the most promising path to both influence and the power 
to contribute to the achievement of his ideals. Even more than 
that: the more conservatively inclined man of first class ability will 
in general choose intellectual work (and the sacrifice in material 
reward which this choice usually entails) only if he enjoys it for its 



own sake. He is in consequence more likely to become an expert 
scholar rather than an intellectual in the specific sense of the word; 
while to the more radically minded the intellectual pursuit is more 
often than not a means rather than an end, a path to exactly that 
kind of wide influence which the professional intellectual exer- 
cises. It is therefore probably the fact, not that the more intelligent 
people are generally socialists, but that a much higher proportion 
of socialists among the best minds devote themselves to those 
intellectual pursuits which in modern society give them a decisive 
influence on public opinion. 3 

The selection of the personnel of the intellectuals is also closely 
connected with the predominant interest which they show in 
general and abstract ideas. Speculations about the possible entire 
reconstruction of society give the intellectual a fare much more to 
his taste than the more practical and short-run considerations of 
those who aim at a piecemeal improvement of the existing order. 
In particular, socialist thought owes its appeal to the young largely 
to its visionary character; the very courage to indulge in Utopian 
thought is in this respect a source of strength to the socialists 
which traditional liberalism sadly lacks. This difference operates 
in favour of socialism, not only because speculation about general 
principles provides an opportunity for the play of the imagination 

3 Related to this is another familiar phenomenon: there is little reason to believe 
that really first-class intellectual ability for original work is any rarer among 
Gentiles than among Jews. Yet there can be little doubt that men of Jewish stock 
almost everywhere constitute a disproportionately large number of the intellec- 
tuals in our sense, that is of the ranks of the professional interpreters of ideas. 
This may be their special gift and certainly is their main opportunity in countries 
where prejudice puts obstacles in their way in other fields. It is probably more be- 
cause they constitute so large a proportion of the intellectuals than for any other 
reason that they seem to be so much more receptive to socialist ideas than people 
of different stocks. 



of those who are unencumbered by much knowledge of the facts 
of present-day life, but also because it satisfies a legitimate desire 
for the understanding of the rational basis of any social order and 
gives scope for the exercise of that constructive urge for which 
liberalism, after it had won its great victories, left few outlets. The 
intellectual, by his whole disposition, is uninterested in technical 
details or practical difficulties. What appeal to him are the broad 
visions, the specious comprehension of the social order as a whole 
which a planned system promises. 

This fact that the tastes of the intellectual were better satis- 
fied by the speculations of the socialists proved fatal to the influ- 
ence of the liberal tradition. Once the basic demands of the liberal 
programmes seemed satisfied, the liberal thinkers turned to 
problems of detail and tended to neglect the development of the 
general philosophy of liberalism, which in consequence ceased 
to be a live issue offering scope for general speculation. Thus for 
something over half a century it has been only the socialists who 
have offered anything like an explicit programme of social devel- 
opment, a picture of the future society at which they were aiming, 
and a set of general principles to guide decisions on particular 
issues. Even though, if I am right, their ideals suffer from inherent 
contradictions, and any attempt to put them into practice must 
produce something utterly different from what they expect, this 
does not alter the fact that their programme for change is the only 
one which has actually influenced the development of social insti- 
tutions. It is because theirs has become the only explicit general 
philosophy of social policy held by a large group, the only system 
or theory which raises new problems and opens new horizons, 
that they have succeeded in inspiring the imagination of the intel- 



The actual developments of society during this period were 
determined not by a battle of conflicting ideals, but by the 
contrast between an existing state of affairs and that one ideal of 
a possible future society which the socialists alone held up before 
the public. Very few of the other programmes which offered them- 
selves provided genuine alternatives. Most of them were mere 
compromises or half-way houses between the more extreme types 
of socialism and the existing order. All that was needed to make 
almost any socialist proposal appear reasonable to these 'judicious' 
minds who were constitutionally convinced that the truth must 
always lie in the middle between the extremes, was for someone 
to advocate a sufficiently more extreme proposal. There seemed 
to exist only one direction in which we could move, and the only 
question seemed to be how fast and how far the movement should 


The significance of the special appeal to the intellectuals which 
socialism derives from its speculative character will become 
clearer if we further contrast the position of the socialist theorist 
with that of his counterpart who is a liberal in the old sense of the 
word. This comparison will also lead us to whatever lesson we 
can draw from an adequate appreciation of the intellectual forces 
which are undermining the foundations of a free society. 

Paradoxically enough, one of the main handicaps which 
deprives the liberal thinker of popular influence is closely 
connected with the fact that, until socialism has actually arrived, 
he has more opportunity of directly influencing decisions on 
current policy and that in consequence he is not only not tempted 



into that long-run speculation which is the strength of the social- 
ists, but is actually discouraged from it because any effort of this 
kind is likely to reduce the immediate good he can do. Whatever 
power he has to influence practical decisions he owes to his 
standing with the representatives of the existing order, and this 
standing he would endanger if he devoted himself to the kind of 
speculation which would appeal to the intellectuals and which 
through them could influence developments over longer periods. 
In order to carry weight with the powers that be, he has to be 
'practical', 'sensible', and 'realistic'. So long as he concerns himself 
with immediate issues, he is rewarded with influence, material 
success, and popularity with those who up to a point share his 
general outlook. But these men have little respect for those specu- 
lations on general principles which shape the intellectual climate. 
Indeed, if he seriously indulges in such long-run speculation, he 
is apt to acquire the reputation of being 'unsound' or even half a 
socialist, because he is unwilling to identify the existing order with 
the free system at which he aims. 4 

If, in spite of this, his efforts continue in the direction of 
general speculation, he soon discovers that it is unsafe to associate 
too closely with those who seem to share most of his convictions, 
and he is soon driven into isolation. Indeed there can be few more 

4 The most glaring recent example of such condemnation of a somewhat unortho- 
dox liberal work as 'socialist' has been provided by some comments on the late 
Henry Simons's Economic Policy for a Free Society (1948). One need not agree with 
the whole of this work and one may even regard some of the suggestions made in 
it as incompatible with a free society, and yet recognise it as one of the most im- 
portant contributions made in recent times to our problem and as just the kind of 
work which is required to get discussion started on the fundamental issues. Even 
those who violently disagree with some of its suggestions should welcome it as a 
contribution which clearly and courageously raises the central problems of our 



thankless tasks at present than the essential one of developing the 
philosophical foundation on which the further development of a 
free society must be based. Since the man who undertakes it must 
accept much of the framework of the existing order, he will appear 
to many of the more speculatively minded intellectuals merely as 
a timid apologist of things as they are; at the same time he will 
be dismissed by the men of affairs as an impractical theorist. He 
is not radical enough for those who know only the world where 
'with ease together dwell the thoughts' and much too radical for 
those who see only how 'hard in space together clash the things'. 
If he takes advantage of such support as he can get from the men 
of affairs, he will almost certainly discredit himself with those 
on whom he depends for the spreading of his ideas. At the same 
time he will need most carefully to avoid anything resembling 
extravagance or overstatement. While no socialist theorist has 
ever been known to discredit himself with his fellows even by the 
silliest of proposals, the old-fashioned liberal will damn himself 
by an impracticable suggestion. Yet for the intellectuals he will 
still not be speculative or adventurous enough, and the changes 
and improvements in the social structure he will have to offer will 
seem limited in comparison with what their less restrained imagin- 
ation conceives. 

At least in a society in which the main requisites of freedom 
have already been won and further improvements must concern 
points of comparative detail, the liberal programme can have 
none of the glamour of a new invention. The appreciation of 
the improvements it has to offer requires more knowledge of 
the working of the existing society than the average intellectual 
possesses. The discussion of these improvements must proceed 
on a more practical level than that of the more revolutionary 



programmes, thus giving a complexion which has little appeal 
for the intellectual and tending to bring in elements to whom 
he feels directly antagonistic. Those who are most familiar with 
the working of the present society are also usually interested in 
the preservation of particular features of that society which may 
not be defensible on general principles. Unlike the person who 
looks for an entirely new future order and who naturally turns for 
guidance to the theorist, the men who believe in the existing order 
also usually think that they understand it much better than any 
theorist and in consequence are likely to reject whatever is unfa- 
miliar and theoretical. 

The difficulty of finding genuine and disinterested support for 
a systematic policy for freedom is not new. In a passage of which 
the reception of a recent book of mine has often reminded me, 
Lord Acton long ago described how: 

at all times sincere friends of freedom have been rare, and its 
triumphs have been due to minorities, that have prevailed 
by associating themselves with auxiliaries whose objects 
differed from their own; and this association, which is 
always dangerous, has been sometimes disastrous, by giving 
to opponents just grounds of opposition. . . 5 

More recently, one of the most distinguished living American 
economists has complained in a similar vein that the main task of 
those who believe in the basic principles of the capitalist system 
must frequently be to defend this system against the capitalists 
- indeed the great liberal economists, from Adam Smith to the 
present, have always known this. 

The most serious obstacle which separates the practical men 

5 Acton, The History of Freedom, London, 1922. 



who have the cause of freedom genuinely at heart from those forces 
which in the realm of ideas decide the course of development is 
their deep distrust of theoretical speculation and their tendency 
to orthodoxy; this, more than anything else, creates an almost 
impassable barrier between them and those intellectuals who 
are devoted to the same cause and whose assistance is indispens- 
able if the cause is to prevail. Although this tendency is perhaps 
natural among men who defend a system because it has justified 
itself in practice, and to whom its intellectual justification seems 
immaterial, it is fatal to its survival because it deprives it of the 
support it most needs. Orthodoxy of any kind, any pretence that 
a system of ideas is final and must be unquestioningly accepted as 
a whole, is the one view which of necessity antagonises all intellec- 
tuals, whatever their views on particular issues. Any system which 
judges men by the completeness of their conformity to a fixed set 
of opinions, by their 'soundness' or the extent to which they can 
be relied upon to hold approved views on all points, deprives itself 
of a support without which no set of ideas can maintain its influ- 
ence in modern society. The ability to criticise accepted views, 
to explore new vistas and to experiment with new conceptions, 
provides the atmosphere without which the intellectual cannot 
breathe. A cause which offers no scope for these traits can have 
no support from him and is thereby doomed in any society which, 
like ours, rests on his services. 


It may be that a free society as we have known it carries in itself the 
forces of its own destruction, that once freedom has been achieved 
it is taken for granted and ceases to be valued, and that the free 



growth of ideas which is the essence of a free society will bring 
about the destruction of the foundations on which it depends. 
There can be little doubt that in countries like the United States 
the ideal of freedom has today less real appeal for the young than 
it has in countries where they have learned what its loss means. 
On the other hand, there is every sign that in Germany and else- 
where, to the young men who have never known a free society, the 
task of constructing one can become as exciting and fascinating as 
any socialist scheme which has appeared during the last hundred 
years. It is an extraordinary fact, though one which many visitors 
have experienced, that in speaking to German students about the 
principles of a liberal society one finds a more responsive and 
even enthusiastic audience than one can hope to find in any of the 
Western democracies. In Britain also there is already appearing 
among the young a new interest in the principles of true liberalism 
which certainly did not exist a few years ago. 

Does this mean that freedom is valued only when it is lost, 
that the world must everywhere go through a dark phase of 
socialist totalitarianism before the forces of freedom can gather 
strength anew? It may be so, but I hope it need not be. Yet, so long 
as the people who over longer periods determine public opinion 
continue to be attracted by the ideals of socialism, the trend will 
continue. If we are to avoid such a development, we must be able 
to offer a new liberal programme which appeals to the imagina- 
tion. We must make the building of a free society once more an 
intellectual adventure, a deed of courage. What we lack is a liberal 
Utopia, a programme which seems neither a mere defence of 
things as they are nor a diluted kind of socialism, but a truly liberal 
radicalism which does not spare the susceptibilities of the mighty 
(including the trade unions), which is not too severely practical, 



and which does not confine itself to what appears today as politic- 
ally possible. We need intellectual leaders who are prepared to 
resist the blandishments of power and influence and who are 
willing to work for an ideal, however small may be the prospects 
of its early realisation. They must be men who are willing to stick 
to principles and to fight for their full realisation, however remote. 
The practical compromises they must leave to the politicians. 
Free trade and freedom of opportunity are ideals which still may 
arouse the imaginations of large numbers, but a mere 'reasonable 
freedom of trade' or a mere 'relaxation of controls' is neither intel- 
lectually respectable nor likely to inspire any enthusiasm. 

The main lesson which the true liberal must learn from the 
success of the socialists is that it was their courage to be Utopian 
which gained them the support of the intellectuals and therefore 
an influence on public opinion which is daily making possible 
what only recently seemed utterly remote. Those who have 
concerned themselves exclusively with what seemed practicable in 
the existing state of opinion have constantly found that even this 
has rapidly become politically impossible as the result of changes 
in a public opinion which they have done nothing to guide. Unless 
we can make the philosophic foundations of a free society once 
more a living intellectual issue, and its implementation a task 
which challenges the ingenuity and imagination of our liveliest 
minds, the prospects of freedom are indeed dark. But if we can 
regain that belief in the power of ideas which was the mark of 
liberalism at its best, the battle is not lost. The intellectual revival 
of liberalism is already under way in many parts of the world. Will 
it be in time? 



The Institute is a research and educational charity (No. CC 235 351), limited 
by guarantee. Its mission is to improve understanding of the fundamental 
institutions of a free society with particular reference to the role of markets in 
solving economic and social problems. 
The IEA achieves its mission by: 

• a high-quality publishing programme 

• conferences, seminars, lectures and other events 

• outreach to school and college students 

• brokering media introductions and appearances 

The IEA, which was established in 1 955 by the late Sir Antony Fisher, is 
an educational charity, not a political organisation. It is independent of any 
political party or group and does not carry on activities intended to affect 
support for any political party or candidate in any election or referendum, or 
at any other time. It is financed by sales of publications, conference fees and 
voluntary donations. 

In addition to its main series of publications the IEA also publishes a 
quarterly journal, Economic Affairs. 

The IEA is aided in its work by a distinguished international Academic 
Advisory Council and an eminent panel of Honorary Fellows. Together with 
other academics, they review prospective IEA publications, their comments 
being passed on anonymously to authors. All IEA papers are therefore subject to 
the same rigorous independent refereeing process as used by leading academic 

IEA publications enjoy widespread classroom use and course adoptions 
in schools and universities. They are also sold throughout the world and often 

Since 1 974 the IEA has helped to create a world-wide network of 1 00 
similar institutions in over 70 countries. They are all independent but share the 
lEA's mission. 

Views expressed in the lEA's publications are those of the authors, not 
those of the Institute (which has no corporate view), its Managing Trustees, 
Academic Advisory Council members or senior staff. 

Members of the Institute's Academic Advisory Council, Honorary Fellows, 
Trustees and Staff are listed on the following page. 

The Institute gratefully acknowledges financial support for its publications 
programme and other work from a generous benefaction by the late Alec and 
Beryl Warren. 


The Institute of Economic Affairs 

2 Lord North Street, Westminster, London SW1P 3LB 

Tel: 020 7799 8900 

Fax: 020 7799 21 37 



Director General 

|ohn Blundell 

Editorial Director 

Professor Philip Booth 

Managing Trustees 

Chairman: Professor D R Myddelton 
Kevin Bell 
Robert Boyd 
Michael Fisher 
Malcolm McAlpine 

Professor Patrick Minford 
Professor Martin Ricketts 
Sir Peter Walters 
Linda Whetstone 

Academic Advisory Council 

Chairman: Professor Martin Ricketts 
Graham Bannock 
Professor Norman Barry 
Dr Roger Bate 

Professor Donald | Boudreaux 
Professor |ohn Burton 
Professor Forrest Capie 
Professor Steven N S Cheung 
Professor Tim Congdon 
Professor N F R Crafts 
Professor David de Meza 
Professor Kevin Dowd 
Professor Richard A Epstein 
Nigel Essex 

Professor David Greenaway 
Dr Ingrid A Gregg 
Walter E Grinder 
Professor Steve H Hanke 
Professor Keith Hartley 
Professor David Henderson 
Professor Peter M |ackson 
Dr |erry |ordan 
Dr Lynne Kiesling 
Professor Daniel B Klein 
Dr Anja Kluever 

Professor Stephen C Littlechild 
Dr Eileen Marshall 
Professor Antonio Martino 
Julian Morris 
Paul Ormerod 
Professor David Parker 
Dr Mark Pennington 
Professor Victoria Curzon Price 
Professor Colin Robinson 
Professor Charles K Rowley 
Professor Pascal Salin 
Dr Razee n Sally 
Professor Pedro Schwartz 
Professor J R Shackleton 
Jane S Shaw 

Professor W Stanley Siebert 
Dr Elaine Sternberg 
Professor James Tooley 
Professor Nicola Tynan 
Professor Roland Vaubel 
Professor Lawrence H White 
Professor Walter E Williams 
Professor Geoffrey E Wood 

Honorary Fellows 

Professor Armen A Alchian Professor Chiaki Nishiyama 

Professor Michael Beenstock Professor Sir Alan Peacock 

Sir Samuel Brittan Professor Ben Roberts 

Professor James M Buchanan Professor Anna J Schwartz 

Professor Ronald H Coase Professor Vernon L Smith 

Dr R M Hartwell Professor Gordon Tullock 

Professor Terence W Hutchison Professor Sir Alan Walters 

Professor David Laidler Professor Basil S Yamey 
Professor Dennis S Lees 


Other papers recently published by the IEA include: 
WHO, What and Why? 

Transnational Government, Legitimacy and the World Health Organization 
Roger Scruton 

Occasional Paper 113; ISBN o 255 36487 3 

The World Turned Rightside Up 

A New Trading Agenda for the Age of Globalisation 
John C. Hulsman 

Occasional Paper 114; ISBN o 255 36495 4 

The Representation of Business in English Literature 

Introduced and edited by Arthur Pollard 
Readings 53; ISBN o 255 36491 1 

Anti-Liberalism 2000 

The Rise of New Millennium Collectivism 
David Henderson 

Occasional Paper 115; ISBN o 255 36497 o 

Capitalism, Morality and Markets 

Brian Griffiths, Robert A. Sirico, Norman Barry & Frank Field 

Readings 54; ISBN o 255 36496 2 


A Conversation with Harris and Seldon 

Ralph Harris & Arthur Seldon 
Occasional Paper 116; ISBN o 255 36498 9 

Malaria and the DDT Story 

Richard Tren & Roger Bate 

Occasional Paper 117; ISBN o 255 36499 7 


A Plea to Economists Who Favour Liberty: 
Assist the Everyman 

Daniel B. Klein 

Occasional Paper 118; ISBN o 255 36501 2 

The Changing Fortunes of Economic Liberalism 

Yesterday, Today and Tomorrow 
David Henderson 

Occasional Paper 105 (new edition); ISBN o 255 36520 9 

The Global Education Industry 

Lessons from Private Education in Developing Countries 
James Tooley 

Hobart Paper 141 (new edition); ISBN o 255 36503 9 

Saving Our Streams 

The Role of the Anglers' Conservation Association in 
Protecting English and Welsh Rivers 
Roger Bate 

Research Monograph 53; ISBN o 255 36494 6 

Better Off Out? 

The Benefits or Costs ofEU Membership 
Brian Hindley & Martin Howe 

Occasional Paper 99 (new edition); ISBN o 255 36502 o 

Buckingham at 25 

Freeing the Universities from State Control 
Edited by James Tooley 
Readings 55; ISBN o 255 36512 8 

Lectures on Regulatory and Competition Policy 

Irwin M. Stelzer 

Occasional Paper 120; ISBN o 255 36511 x 

Misguided Virtue 

False Notions of Corporate Social Responsibility 
David Henderson 

Hobart Paper 142; ISBN o 255 36510 1 

HIV and Aids in Schools 

The Political Economy of Pressure Groups and Miseducation 
Barrie Craven, Pauline Dixon, Gordon Stewart & James Tooley 
Occasional Paper 121; ISBN o 255 36522 5 

The Road to Serfdom 

The Reader's Digest condensed version 
Friedrich A. Hayek 

Occasional Paper 122; ISBN o 255 36530 6 

Bastiat's The Law 

Introduction by Norman Barry 
Occasional Paper 123; ISBN o 255 36509 8 

A Clobalist Manifesto for Public Policy 

Charles Calomiris 

Occasional Paper 124; ISBN o 255 36525 x 

Euthanasia for Death Duties 

Putting Inheritance Tax Out of Its Misery 

Barry Bracewell-Milnes 

Research Monograph 54; ISBN o 255 36513 6 


Liberating the Land 

The Case for Private Land-use Planning 
Mark Pennington 

Hobart Paper 143; ISBN o 255 36508 x 

IEA Yearbook of Government Performance 

Edited by Peter Warburton 
Yearbook 1; ISBN o 255 36532 2 

Britain's Relative Economic Performance, 1870- 

Nicholas Crafts 

Research Monograph 55; ISBN o 255 36524 1 

Should We Have Faith in Central Banks? 

Otmar Issing 

Occasional Paper 125; ISBN o 255 36528 4 

The Dilemma of Democracy 

Arthur Seldon 

Hobart Paper 136 (reissue); ISBN o 255 36536 5 

Capital Controls: a 'Cure' Worse Than the Problem? 

Forrest Capie 

Research Monograph 56; ISBN o 255 36506 3 

The Poverty of 'Development Economics' 

Deepak Lai 

Hobart Paper 144 (reissue); ISBN o 255 36519 5 

Should Britain Join the Euro? 

The Chancellor's Five Tests Examined 
Patrick Minford 

Occasional Paper 126; ISBN o 255 36527 6 

Post-Communist Transition: Some Lessons 

Leszek Balcerowicz 

Occasional Paper 127; ISBN o 255 36533 o 

A Tribute to Peter Bauer 

John Blundell et al. 

Occasional Paper 128; ISBN o 255 36531 4 

Employment Tribunals 

Their Growth and the Case for Radical Reform 
J. R. Shackleton 

Hobart Paper 145; ISBN o 255 36515 2 

Fifty Economic Fallacies Exposed 

Geoffrey E. Wood 

Occasional Paper 129; ISBN o 255 36518 7 

A Market in Airport Slots 

Keith Boyfield (editor), David Starkie, Tom Bass & Barry Humphreys 

Readings 56; ISBN o 255 36505 5 


Money, Inflation and the Constitutional Position of 
the Central Bank 

Milton Friedman & Charles A. E. Goodhart 
Readings 57; ISBN o 255 36538 1 

Parallels between the Early British Railways and the ICT Revolution 
Robert C. B. Miller 

Research Monograph 57; ISBN o 255 36534 9 

The Regulation of Financial Markets 

Edited by Philip Booth & David Currie 
Readings 58; ISBN o 255 36551 9 

Climate Alarmism Reconsidered 

Robert L. Bradley Jr 

Hobart Paper 146; ISBN o 255 36541 1 


Government Failure: E. C. West on Education 

Edited by James Tooley & James Stanfield 
Occasional Paper 130; ISBN o 255 36552 7 

Waging the War of Ideas 

John Blundell 
Second edition 

Occasional Paper 131; ISBN o 255 36547 o 

Corporate Governance: Accountability in 
the Marketplace 

Elaine Sternberg 
Second edition 

Hobart Paper 147; ISBN o 255 36542 X 

The Land Use Planning System 

Evaluating Options for Reform 
John Corkindale 

Hobart Paper 148; ISBN o 255 36550 o 

Economy and Virtue 

Essays on the Theme of Markets and Morality 
Edited by Dennis O'Keeffe 
Readings 59; ISBN o 255 36504 7 

Free Markets Under Siege 

Cartels, Politics and Social Welfare 
Richard A. Epstein 

Occasional Paper 132; ISBN o 255 36553 5 

Unshackling Accountants 

D. R. Myddelton 

Hobart Paper 149; ISBN o 255 36559 4 

The Euro as Politics 

Pedro Schwartz 

Research Monograph 58; ISBN o 255 36535 7 

Pricing Our Roads 

Vision and Reality 

Stephen Glaister & Daniel J. Graham 
Research Monograph 59; ISBN o 255 36562 4 

The Role of Business in the Modern World 

Progress, Pressures, and Prospects for the Market Economy 
David Henderson 

Hobart Paper 150; ISBN o 255 36548 9 

Public Service Broadcasting Without the BBC? 

Alan Peacock 

Occasional Paper 133; ISBN o 255 36565 9 

The ECB and the Euro: the First Five Years 

Otmar Issing 

Occasional Paper 134; ISBN o 255 36555 1 

Towards a Liberal Utopia? 

Edited by Philip Booth 

Hobart Paperback 32; ISBN o 255 36563 2 


The Way Out of the Pensions Quagmire 

Philip Booth & Deborah Cooper 

Research Monograph 60; ISBN o 255 36517 9 


Black Wednesday 

A Re-examination of Britain's Experience in the Exchange Rate Mechanism 
Alan Budd 

Occasional Paper 135; ISBN o 255 36566 7 

Crime: Economic Incentives and Social Networks 

Paul Ormerod 

Hobart Paper 151; ISBN o 255 36554 3 

To order copies of currently available IEA papers, or to enquire about 
availability, please contact: 

Lavis Marketing 
IEA orders 

Oxford 0x3 7BR 

Tel: 01865 767575 
Fax: 01865 750079 


The IEA also offers a subscription service to its publications. For a single 
annual payment, currently £40.00 in the UK, you will receive every 
title the IEA publishes during the course of a year, invitations to events, 
and discounts on our extensive back catalogue. For more information, 
please contact: 

Adam Myers 

The Institute of Economic Affairs 
2 Lord North Street 
London swip 3LB 

Tel: 020 7799 8920 
Fax: 020 7799 2137